With a Nearly 7% Yield and Soaring Profits, Is Energy Transfer Stock a Buy?

As a huge energy arbitrageur, Energy Transfer (NYSE: ET) is one of the best companies in the world at benefiting from energy market volatility. That showed up when the master limited partnership (MLP) reported its Q2 results and once again raised its full-year forecast. The stock is now up about 25% on the year.

Let's dig into the midstream company's results and why the stock still looks like a buy.

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Strong growth ahead

In my view, Energy Transfer is one of the most attractive high-yield stocks in the market today. It currently sports a 6.7% yield and intends to raise its distribution by 3% to 5% annually. It has one of the lowest valuations in the midstream MLP segment and some of the best growth opportunities.

Energy Transfer's growth opportunities stem from its robust project backlog. It plans to spend between $5.6 billion and $5.9 billion in growth capital expenditures (capex) this year, with a focus on natural gas infrastructure. That's a significant increase from the $4.5 billion on capex it spent in 2025. These projects are all supported by long-term contracts and are expected to generate mid-teen returns.

Meanwhile, Phase 1 of its Hugh Brinson Pipeline is now in service, earlier than expected, with full capacity anticipated by Sept. 1. Phase 2 is set to come online in Q1 of next year. This is one of Energy Transfer's most important projects, linking natural gas from the West Texas Permian Basin to access points throughout Texas and connecting it with its other pipelines to reach additional states. It will contribute to growth this year and become a bigger contributor in 2027.

Turning to Energy Transfer's Q2 results, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) soared by 31% year over year to $5.07 billion. It saw strength across its five segments, led by its NGL (natural gas liquids) and refined products segment, where adjusted EBITDA climbed 30% to $1.3 billion. This was driven by record exports from the Nederland and Marcus Hook terminals, higher NGL premiums, and better margins from its product optimization and blending operations.

Distributable cash flow to partners, which is operating cash flow minus maintenance capex, climbed 32% to $2.59 billion, up from $1.96 billion a year ago. It paid out $1.17 billion in distributions in the quarter, good for a coverage ratio of 2.2 times, demonstrating that its current distribution appears secure.

The company also once again significantly increased its full-year EBITDA forecast, taking it to a range of $18.8 billion to $19.1 billion. That's up from an earlier projection of $18.2 billion to $18.6 billion and well above its original forecast of $17.3 billion to $17.7 billion. It said additional upside to its forecast will depend on the duration and impact of current market disruptions.

Still a top high-yield stock to buy

Energy Transfer is one of the best combinations of growth and income stocks in the market today. Although some of its outperformance is driven by energy market volatility, the company has always been great at profiting from it, whether due to war, weather, regional or product differentials, or anything else. These opportunities are not always there, but they also are not infrequent.

At the same time, the company has a very robust, high-return project pipeline. Based on its comments, the company's capex this year alone could add more than $900 million in EBITDA once these projects are all up and running. They will come on at different times, but this should be a nice growth driver in the years ahead.

Energy Transfer is also one of the most attractively valued midstream MLPs, trading at a forward enterprise value-to-EBITDA multiple of just 8.5 times. That is a big discount to other MLPs like Plains All American Partners and MPLX , which both trade at more than 11.5 times, and Enterprise Products Partners, which trades at 10.5 times.

As the cheapest midstream MLP with some of the best growth prospects, Energy Transfer is a top stock to own.

Geoffrey Seiler has positions in Energy Transfer and Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.