Could Energy Transfer Be Your Best Investment in the Second Half of 2025?

Key Points

• Energy Transfer expects to complete several expansion projects in the second half of this year.

• The MLP could approve more growth projects by year-end.

• It could also make another needle-moving acquisition.

• 10 stocks we like better than Energy Transfer ›

Energy Transfer (NYSE: ET) had a relatively quiet first half of the year. The master limited partnership (MLP) didn't make an acquisition or approve a major growth project. That's likely why its unit price has slumped nearly 10% this year.

While the MLP had a lackluster first half, its prospects appear brighter for the second half.

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Second-half catalysts abound for Energy Transfer

This year will be a more transitional period for Energy Transfer. The midstream giant delivered 13% growth in its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) last year, fueled by the acquisition of Crestwood Equity Partners in late 2023 and WTG Midstream last year. The company expects its earnings growth rate to slow to about 5% this year due to fewer growth catalysts.

However, the MLP's growth engine should start ramping back up in the second half of this year and into 2026. It's investing $5 billion in growth capital projects this year. Those projects will begin entering service in the second half of this year (including its Nederland Flexport NGL Expansion and Badger gas processing plant) and continue through the end of next year. As a result, its growth rate should accelerate, potentially giving its stock a boost.

Energy Transfer could approve more expansion projects in the second half of the year, including the Lake Charles LNG terminal and new projects supplying gas to artificial intelligence (AI) data centers. These approvals could provide further upside for the company's price.

Energy Transfer is also currently in its strongest financial position ever. This financial flexibility could allow it to make a major acquisition that would accelerate growth and help reignite its unit price.

On top of these potential upside catalysts, Energy Transfer currently offers investors an attractive income stream (more than 7% distribution yield). That payout will provide investors with a nice base return in the second half.

Add it all up, and the catalysts are there for Energy Transfer to be an excellent investment in the second half of 2025.

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Matt DiLallo has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.