Energy Transfer: Buy, Sell, or Hold?
Energy Transfer (NYSE: ET) is the kind of business that an income investor would be attracted to. Its midstream assets produce reliable, fee-driven cash flows that help support a large and growing distribution. The distribution yield is a lofty 6.8%. But there are some issues that you need to think about before buying. Here's a look at the buy, sell, or hold call on Energy Transfer.If you place a high value on trust, you probably won't want to own Energy Transfer at any price. There are two reasons for this. The first one is pretty simple; the board chose to cut the dividend by 50% during the coronavirus pandemic. Given the uncertainty at the time that was probably the right move for the master limited partnership (MLP), but it would have meant a massive reduction in income for an investor that was trying to live off of their dividends. And it happened right when income stability was most needed, during a recession and bear market. Peer Enterprise Products Partners (NYSE: EPD), by comparison, increased its distribution in 2020.Image source: Getty Images.Continue reading
Energy Transfer (NYSE: ET) is the kind of business that an income investor would be attracted to. Its midstream assets produce reliable, fee-driven cash flows that help support a large and growing distribution. The distribution yield is a lofty 6.8%. But there are some issues that you need to think about before buying. Here's a look at the buy, sell, or hold call on Energy Transfer.
If you place a high value on trust, you probably won't want to own Energy Transfer at any price. There are two reasons for this. The first one is pretty simple; the board chose to cut the dividend by 50% during the coronavirus pandemic. Given the uncertainty at the time that was probably the right move for the master limited partnership (MLP), but it would have meant a massive reduction in income for an investor that was trying to live off of their dividends. And it happened right when income stability was most needed, during a recession and bear market. Peer Enterprise Products Partners (NYSE: EPD), by comparison, increased its distribution in 2020.
Image source: Getty Images.
