ET - Energy Transfer's Ultra-High Yield Is Great. Here's Why You Shouldn't Buy It.
2024-04-09 04:15:00 ET
Energy Transfer (NYSE: ET) has one very major positive to boast: Its distribution yield is a huge 8.1%. But don't get so enamored of the high yield that you overlook the rest of the story. In fact, while the fat yield is attractive, the master limited partnership (MLP) backing it has some very material negatives. Here's why you shouldn't buy Energy Transfer stock.
Although already noted, the big positive here is Energy Transfer's 8.1% distribution yield. Compare that to the scant 1.3% dividend yield you can collect from the S&P 500 index or the 3.1% on offer from Energy Select Sector SPDR ETF (NYSEMKT: XLE) , which represents the energy sector of the S&P 500 index. Based on these comparisons, you can see why dividend investors would be interested in Energy Transfer.
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Energy Transfer's Ultra-High Yield Is Great. Here's Why You Shouldn't Buy It.