Energy Transfer's Payout Is Covered Twice Over. Here's Why That Matters More Than the Yield Itself.
The midstream pipeline operator is still a reliable income investment.
Overview
Energy Transfer (NYSE: ET), which operates more than 140,000 miles of pipeline across 44 states, pays a forward yield of 6.3%. That high yield might seem risky, but it can easily cover its distributions with its cash flow. Let's see why that balance makes it a great income investment.
As a midstream pipeline operator, Energy Transfer charges both upstream and downstream companies "tolls" to transport natural gas, crude oil, and other resources through its pipelines. That business model is well insulated from volatile commodity prices because it only needs those resources to keep flowing to grow its profits and distributable cash flow (DCF).
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Source
Originally published at www.fool.com.