Here's Why Energy Transfer Stock Is a Buy Before May 6

It's important for investors to take the long-term view. We should be looking to buy and hold companies for years, if not decades, because that can produce the best total returns. As such, we shouldn't put too much emphasis on the short-term gyrations of a company's stock price or quarterly earnings.

However, it's also prudent to keep dates in mind when planning your investments. For those thinking about buying midstream giant Energy Transfer (NYSE: ET), May 6 is an important date. Here's why those considering an investment in the master limited partnership (MLP) might want to buy it before that date.

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What happens on May 6th?

May 6 is a potentially big day for Energy Transfer. It's when the midstream giant will report its first-quarter results, which it plans to release after the market closes. That report could act as a catalyst for the MLP's unit price.

The company's unit price could rise after the report if it posts better-than-expected earnings. Energy Transfer is coming off a strong year as a combination of acquisitions, recently completed expansion projects, and strong market conditions fueled growing volumes and earnings.

That momentum should have carried over into the first quarter. Energy Transfer completed several expansion projects late last year, including the initial phase of the Sabine 2 pipeline conversion, optimization of its Grey Wolf processing plant, and the first of eight new 10-megawatt gas-fired electric generation facilities. It got the full benefit of those projects in the first quarter, which should have contributed to its results.

Another potential catalyst that could coincide with the MLP's earnings report is the announcement that it has approved additional expansion projects. It's getting close to making a positive Final Investment Decision on its long-delayed Lake Charles LNG project. The company has also been working to secure additional projects related to AI data center developments. Positive project news could also be an upside catalyst for the unit price because it would enhance its long-term growth profile.

Energy Transfer could also announce another acquisition when it reports earnings. The MLP is a consolidator in the midstream sector and has made several deals over the past few years, including buying WTG Midstream last year. Unveiling that it has secured another accretive deal could lift its unit price since it could further enhance its growth profile.

Another reason to consider buying soon

May 6 isn't the only important date for Energy Transfer investors in the early part of this month. The 9th of May is another notable date for those considering buying units of Energy Transfer to keep in mind. That's the record date for the MLP's upcoming distribution payment. Investors must own shares by the close of business on May 9 to receive the company's next distribution, which it will pay out on the 20th. Investors who buy after May 9 will have to wait another full quarter before receiving their first cash distribution payment.

That upcoming payment will be a little higher than last quarter's level and more than 3% above where it was a year ago. That aligns with the MLP's plan to increase its distribution in the 3% to 5% annual range by providing small pay bumps each quarter. At its recent unit price, investors can lock in a lucrative 7.6% income yield at its new distribution level.

The MLP's high-yielding payout is on a very sustainable foundation. Energy Transfer generates lots of cash, to the tune of $8.4 billion last year, and has a reasonable payout ratio, distributing $4.4 billion to investors last year. That gives it the financial flexibility to invest in expansion projects and make acquisitions that support its distribution growth plan while maintaining a rock-solid balance sheet.

Some important dates are coming up

Energy Transfer is a great long-term investment. The MLP generates stable and growing cash flow, enabling it to pay a lucrative and steadily rising distribution.

While the company is a great long-term holding, those thinking about buying units might want to do so before some of its upcoming catalysts, including its earnings report on May 6th. Buying before that date would ensure that investors get into their position before a potential price spike if it reports stronger-than-expected earnings or unveils that it secured some additional growth drivers. It would also guarantee that you get its next distribution payment.

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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.