Energy Transfer Stock Is Up Big in 2026. Is There Still Time to Get In?

Energy prices are soaring as the war in Iran continues. The Strait of Hormuz, for all intents and purposes, is closed, denying passage to approximately 20% of the global petroleum supply. Higher prices are driving energy stocks up to highs.

Among them is Energy Transfer (NYSE: ET), up 16% in 2026. Dramatic price swings aren't the norm for the renowned midstream company, which has a beta of 0.63 and typically trades less volatilely than the broader market.

Is there still time to buy Energy Transfer?

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Energy Transfer's 6.8% yield still bests most alternatives

Energy Transfer is a master limited partnership (MLP) that often trades with an abnormally high yield due to its large distribution -- that's the MLP equivalent of a dividend. Unlike corporations, MLPs don't pay a corporate income tax. Instead, they pass their profits, losses, and depreciation deductions to minority partners to report on their tax returns using a K-1 tax form.

Investors usually own MLPs for the income they generate, so yield is an important valuation metric for Energy Transfer relative to other income-generating investments.

Units (shares) of Energy Transfer pay a 6.9% yield today. That's notably higher than many popular income-generating assets. Investors can currently get 4.4% from 10-year U.S. Treasuries. A high-yield online savings account will pay about 4% right now. The Schwab U.S. Dividend Equity ETF, a popular high-yield investment fund, yields 3.4% at its current price.

If immediate and sizable investment income is important to you, it's still hard to beat Energy Transfer's distributions.

But is the distribution safe? Here's what the numbers say

Energy Transfer generates about 90% of its adjusted EBITDA -- that's earnings before interest, taxes, depreciation, and amortization -- from contract fees. Its business operates like a toll road, generating most of its revenue from the traffic, or materials in this case, that flow through its pipelines. Therefore, the company has very little direct short-term exposure to commodity prices.

In 2025, the company generated approximately $8.2 billion in distributable cash flow, which is the total cash profits available to send to its partners. Energy Transfer's total 2025 distributions amounted to $4.55 billion, a payout ratio of only 55%. It's a pretty sizable financial cushion.

Nobody knows what the future holds, but given the state of the Middle East, it's hard to see a prolonged energy price crash that would force Energy Transfer to cut its distribution. If anything, Energy Transfer seems poised for growth that could fund higher distributions. Management is targeting annual increases of 3% to 5%. So, yes, income-focused investors can still get in on Energy Transfer.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.