Energy Transfer LP's Dividend Analysis
Assessing the Sustainability of Energy Transfer LP's Upcoming Dividend
Energy Transfer LP (NYSE:ET) recently announced a dividend of $0.32 per share, payable on 2024-02-20, with the ex-dividend date set for 2024-02-06. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Energy Transfer LP's dividend performance and assess its sustainability.
What Does Energy Transfer LP Do?
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Energy Transfer owns a large platform of crude oil, natural gas, and natural gas liquid assets primarily in Texas and the U.S. midcontinent region. It also has gathering and processing facilities, one of the largest fractionation facilities in the U.S., and fuel distribution. Energy Transfer also owns the Lake Charles gas liquefaction facility. It combined its publicly traded limited and general partnerships in October 2018.
A Glimpse at Energy Transfer LP's Dividend History
Energy Transfer LP has maintained a consistent dividend payment record since 2006. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Energy Transfer LP's Dividend Yield and Growth
As of today, Energy Transfer LP currently has a 12-month trailing dividend yield of 8.62% and a 12-month forward dividend yield of 8.79%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Energy Transfer LP's annual dividend growth rate was -10.70%. Extended to a five-year horizon, this rate increased to -9.80% per year. And over the past decade, Energy Transfer LP's annual dividends per share growth rate stands at 2.70%.
Based on Energy Transfer LP's dividend yield and five-year growth rate, the 5-year yield on cost of Energy Transfer LP stock as of today is approximately 5.15%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Energy Transfer LP's dividend payout ratio is 0.96, which may suggest that the company's dividend may not be sustainable.
Energy Transfer LP's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Energy Transfer LP's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Energy Transfer LP's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Energy Transfer LP's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Energy Transfer LP's revenue has increased by approximately 12.30% per year on average, a rate that outperforms approximately 52.23% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Energy Transfer LP's earnings increased by approximately -0.50% per year on average, a rate that outperforms approximately 28.75% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -2.20%, which outperforms approximately 22.41% of global competitors.
Conclusion: Weighing the Future of Energy Transfer LP's Dividends
Considering Energy Transfer LP's historical commitment to dividends, current yield indicators, and growth potential, investors may find the stock an interesting prospect for dividend income. However, the payout ratio signals caution, warranting a closer examination of the company's ability to maintain its dividends. With a profitability rank that suggests fair earnings capability and revenue growth outperforming many global competitors, Energy Transfer LP may continue to be a valuable addition to dividend-focused portfolios. Still, the mixed signals from growth metrics and payout ratio underline the importance of vigilant monitoring of the company's financial health. For those seeking additional dividend opportunities, GuruFocus Premium users can explore high-yield options with the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
