The Best Energy Stock to Invest $1,000 in Right Now

A critical component of the search for worthwhile, long-term investments is understanding the market forces shaping the world.

In the energy markets, the increasing demands of artificial intelligence (AI) workloads are driving the need for electricity-hungry data centers to find reliable power sources.

That demand is only going to increase. The market researchers at Fortune Business Insights forecast that the global data center market will jump in value from roughly $300 billion in 2026 to around $699 billion by 2034.

One company that is already capitalizing on that growing market is Energy Transfer LP (NYSE: ET).

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The data center catalyst

Energy Transfer is a midstream operator with over 140,000 miles of pipeline and associated energy infrastructure. It transports and stores crude oil, natural gas, and natural gas liquids (NGLs) before they are refined.

Last year, the company inked a large agreement with Oracle to supply natural gas to three U.S. data centers. It also has an agreement with CloudBurst Data Centers to provide natural gas to its data center development in Texas, as well as a similar agreement with Fermi America to supply its AI campus.

As those projects get up and running, they will demonstrate to other tech companies that Energy Transfer can be a reliable partner.

The power of diversification

Data centers are a growth opportunity for energy industry players, but there are other reasons to like Energy Transfer as an investment, particularly its diversified operations and the stability its focus on long-term agreements offers.

Because its operations span crude oil, natural gas, and NGLs, Energy Transfer is less exposed to price fluctuations in a single commodity.

The company also focuses on long-term agreements, which can provide reliable cash flow even during periods of volatility in the broader energy market. As an example, in November 2025, Energy Transfer signed a 20-year natural gas firm transportation agreement with electric utility Entergy Louisiana.

What to consider before investing

The increased demand for natural gas to power data centers is promising, but building, operating, and maintaining pipelines and their associated infrastructure is a capital-intensive process, and Energy Transfer has the balance sheet to prove it. It's carrying more than $70 billion in long-term debt and has a debt-to-equity ratio of 142%. Elevated or increasing interest rates could create an issue for the company if it needs to refinance its debt, as high interest rates will restrict its financial flexibility.

The company also faces industry-related issues, including regulatory hurdles and extreme weather events that disrupt operations.

The stock trades at a forward price-to-earnings ratio of 11.4, a seemingly fair valuation that suggests the market is pricing the company for modest growth. Those who buy today aren't overpaying for shares, but they aren't necessarily getting a bargain either. The stock price has done well so far in 2026, climbing by more than 15%.

If that momentum cools or there's a pullback, shareholders will still be comforted by the company's dividend, which yields nearly 7% at the current share price. Payouts should continue to be meaningful, and the management team is targeting annual increases of 3% to 5% over the long term. Even with the positive outlook, any potential shareholder will still want to keep track of anything that pops up in future quarterly earnings reports that could alter those payouts.

Weighing the risks against the upside of Energy Transfer through its total potential return, I expect that patient investors who put $1,000 (or more) into the stock today will be glad they did so in a few years.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.