Is energy transfer is the most smart investment you can make today?

The energy transfer pays a lucrative distribution maintained by a stable cash flow and a strong financial profile.
MLP has a lot of growth descending through the pipeline.
He is currently trading with one of the largest grades in his peer group.
10 shares we like better than energy transfer ›

Transmission (Nyse: et) It offers investors a high mining distribution (currently about 7.5%), supported by a rock hard financial profile. The Master Limited (MLP) partnership is also growing at a healthy speed, which should continue. In addition, the company trades with a very attractive assessment.

Let’s look at these features to determine if they make the energy to transfer the smartest investment you can make today.

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Midstream’s diversified energy transfer business generates significant and stable cash flow, with a taxi -based contracts supporting about 90% of MLP annual revenue. In the first quarter, the company produced $ 2.3 billion to distribute cash flow. He allocated just over $ 1.1 billion from investors’ money, keeping the rest to invest in expansion projects and maintain his strong financial profile.

This ratio of conservative repayment allowed the MLP to maintain the leverage coefficient in the lower half of its target range from 4 to 4.5 times. This is the company in its strongest financial situation in its history.

This strong financial profile makes the payment of MLP very durable.

The transfer of energy also has a healthy growth profile. MLP is about to increase its profits before interest, taxes, depreciation and depreciation (EBITDA) by about 5% this year. Growth drivers include last year’s acquisition of WTG Midstream, recently completed projects for organic expansion and health market expansion.

MLP has even more forward growth. This year it is investing $ 5 billion in capital growth projects, including several gas processing installations, a major new natural gas pipeline and some additional export. These growth projects should come online in the second half of 2025 until the end of next year. Given this time line, the energy transfer expects these projects to increase profit growth rate during the time frame from 2026 to 2027. This provides MLP with very short -term visibility in its growth growth.

In addition, the energy transfer is developing several expansion projects, including its LNG Lake Charles facility and a new gas supply line for AI data center. MLP identifies three major catalysts – the growing production of Permian, an increase in gas demand from emerging sectors such as AI data data and the increasing demand for natural gas exports – this will provide it with many opportunities to continue to expand its average in the average flow in the coming years. Its ability to provide more new projects will further improve and expand its prospects for growth in profit.

The strong financial situation of the energy transfer also allows to continue the acquisition of accredits that complement its operations and growth. MLP has a long history as a consolator in the middle stream sector, often concluding at least one major transaction every year. The visible growth of profit from its upcoming projects and future expansion opportunities supports the company’s plan to provide 3% to 5% annual increase in distribution.

Despite its strong growth and financial profiles, MLP is currently trading for an enterprise value ratio (EV) -To -bitda below 9. This is the second lowest rating among the middle-stream energy companies, where the medium peer Group is about 12.

This low assessment is a key cause for high -distribution of energy transfer, which increases its attractiveness compared to peers.

Energy transfer offers high -sales distribution and has a strong growth profile. It is also in the best financial form of its history and has an estimate near the bottom of its partnership group. These features make MLP look like a very attractive investment these days as it can lead to a strong overall return. It is especially smart for those seeking a lucrative and increasing passive flow of income with potential tax breaks from the federal tax form to the K-1 graphic tax, which MLP sends investors every year.

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Matt Dilalo has positions in energy transfer. Motley Fool has no position in any of the reserves mentioned. Motley Fool has a policy of disclosure.

Is energy transfer is the most smart investment you can make today? Originally published by Motley Fool

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