Energy Transfer's 6.3% distribution yield is likely to survive the next energy downturn, according to an analysis by The Motley Fool. The master limited partnership cut its distribution in half in 2020 during the pandemic-driven energy slump, but that move was strategic and allowed it to reduce debt-to-EBITDA from a peak of 5.4x at the end of 2020 to 4.1x today. Energy Transfer now targets distribution growth of 3% to 5% a year, and its distributable cash flow covered its distribution by 2.2x in the second quarter, compared with 1.9x for peer Enterprise Products Partners. The article notes that Energy Transfer is more leveraged and more complex than Enterprise, which has a 28-year streak of annual distribution increases and offers a 5.7% yield, making Enterprise the better choice for conservative investors.
Enterprise Products Partners LPEnterprise has a 28-year streak of distribution increases and is deemed better for conservative investors
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Energy Transfer Partners L.P
Energy Transfer LPAnalysis suggests its 6.3% yield is sustainable, with strong coverage and growth targets.
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