Top Dividend Play By TipRanks
Energy Transfer (NYSE:) provides energy-related services.
Its primary focus is on – it sells natural gaz and runs significant pipelines. The stock is a strong buy. (See ET stock charts on TipRanks)
Q2 Results, Valuation
Energy transfer reported its Q2 results in August. EBITDA at $2.62billion was reported by the company, an increase of 105.7% from last year and a $15.1 billion revenue. This is a significant improvement over $2.44billion a year earlier.
Energy Transfer’s forward price to earnings ratio is 4.8, which is 52.3% less than the average for five years and 58.16% lower than that of its sector. This, combined with the forward PEG ratio (1.1), makes it clear that this stock still has a lot of ground to cover.
The stock’s fair value can be found at $14.65 if it is valued using an asset-based valuation.
Forward dividend yield is 6.3% for the stock. Energy Transfer’s forward dividend yield is 6.3%. This dividend payout ratio is 8.8% lower than its average over the past five years and can cover its dividends at 3.2x.
If these numbers are taken in isolation, it would indicate that shareholders could be compensated in the form dividend increases and/or share buybacks.
Supply Chain Concerns
Surging commodity prices have generated temporary slack for energy producers/suppliers.
Energy Transfer holds a solid foothold within the Permian basin. Analysts believe the Permian’s operations will recover fully by 2022. This could boost output and improve contract demand.
Wall Street’s Take
UBS (UBS) recently added Energy Transfer to its list of 20 top dividend stocks due to its income prospects, but also its ability to perform well in a high-yield environment as a value stock.
UBS isn’t the only Wall Street bank to be positive about Energy Transfer stock. Wall Street Analysts have set a median price target of $14 and given six Buy ratings in the three-month period.
Energy Transfer is a great stock whether you’re in search of a capital gains play, or a dividend-paying investment.
Disclosure: Steve Gray Booyens owned a large position in ET as of the publication date.
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