Here's How Many Shares of Energy Transfer You'd Need to Buy for $10,000 in Annual Passive Income
Key Points
Energy Transfer pays an attractive forward yield of 7.05%.
Its business model is stable, and its cash flow easily covers its distributions.
- 10 stocks we like better than Energy Transfer ›
Energy Transfer (NYSE: ET), one of the largest midstream companies in the United States, is a reliable stock for earning passive income. As a pipeline operator, it's well-insulated from volatile oil and gas prices because it merely charges other companies "tolls" to use its infrastructure.
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It's also a master limited partnership (MLP) that blends a return of capital with its own income to pay distributions that are more tax-efficient than conventional dividend-paying energy stocks. You'll need to file a separate tax form for that income, but you can use the MLP's reported losses to reduce your taxable income because you're a "partner" rather than an investor. The portion of your distributions classified as a "return of capital" is also tax-deferred until you sell.
Can Energy Transfer give you $10,000 in annual passive income?
Energy Transfer has a forward yield of 7.05%. That seems high, but its total distributions only accounted for 56% of its adjusted distributable cash flow (DCF) in 2025. Its adjusted DCF has also comfortably covered its total distributions over the past few years.
To earn $10,000 in annual passive income from Energy Transfer at $19 per share, you'd need to buy roughly 7,465 shares for $141,844. That same investment in the 10-Year Treasury, which currently yields 4.38%, would only deliver $6,213 in annual income.
Should you buy stock in Energy Transfer right now?
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Leo Sun has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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