Is Energy Transfer Stock a Buy Right Now?

Key Points

• Energy Transfer’s massive distribution is well funded by its cash profits.

• Soaring energy prices won’t do much for Energy Transfer right now, but could if domestic production activity increases.

• Investors can count on Energy Transfer’s 7.1% yield, and there could be long-term price upside, too.

The ongoing military conflict with Iran, specifically as it relates to the Strait of Hormuz, has disrupted the global energy industry. Oil prices have surged in recent weeks, up nearly double from just a few months ago.

Amid all the uncertainty, Energy Transfer (NYSE: ET) stock is trading up 14% in 2026. The leading pipeline company plays a crucial role in transporting oil and gas throughout the United States.

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But should investors buy Energy Transfer right now? Here is what you need to know.

Image source: Getty Images.

How do market prices impact Energy Transfer?

Energy stocks are getting hot because higher commodity prices mean companies can make more money when selling oil and gas. However, Energy Transfer is a pipeline business; it generates approximately 90% of its earnings before interest, taxes, depreciation, and amortization (EBITDA) from fees for transport and storage, and only 5% to 10% from commodities.

There could be some eventual volume tailwinds if the conflict lasts long enough to boost production from exploration companies that Energy Transfer works with, but that would likely be a lagging effect. For now, investors probably don’t want to put too much weight on the recent volatility as justification for buying the stock.

Why investors can trust that 7.1% yield

If you’re investing for income, Energy Transfer should jump off the page. Energy Transfer is a master limited partnership (MLP), a specialized business structure that passes all of its profits, losses, and depreciation deductions to its partners (investors). That requires a K-1 form each year as part of your personal tax filing.

Many MLPs pay large distributions (dividends), which explains Energy Transfer’s massive 7.1% yield. Ironically, a high yield is often the market’s way of pointing out red flags in a company, but Energy Transfer is on solid footing. The company generated $8.36 billion in distributable cash flow in 2025, nearly twice the $4.38 billion it distributed to partners.

Outside of Energy Transfer cutting its dividend during the pandemic, a historically turbulent time for the energy industry, the company has done a good job of increasing the distribution over time.

Data by YCharts.

Investors who reinvest the distribution can build a massive snowball of passive income over a decade or two.

Growth prospects look bright for Energy Transfer

Yes, if you’re a long-term investor, buying a stock now is really about what you think the business can do years from now. Energy Transfer is a key cog in the U.S. energy landscape, and that’s a good spot to be in. Energy demand is soaring from both exports and from data center activity for artificial intelligence and cloud computing.

Energy Transfer is responding with most of its 2026 growth investments, focused on its natural gas infrastructure in Texas and near the Gulf Coast. It’s connecting oil and gas production to major export hubs, as well as new and existing power plants throughout the country that need natural gas for intermittent and peak-usage requirements.

The U.S. is a global energy powerhouse, and some experts believe natural gas exports could triple by the early 2030s if infrastructure investments continue. It’s hard to imagine such a scenario not driving healthy growth for Energy Transfer over the coming years.

Is Energy Transfer stock a buy now?

The great thing about Energy Transfer is that it offers a very solid floor due to its 7.1% distribution yield. Income investors, or those who want to reinvest distributions to snowball that income, can certainly be buyers today.

But don’t write off capital gains as part of the equation. Energy Transfer’s growth projects could boost its business enough to push shares higher from here, as long as demand stays strong. Given the current events worldwide, that seems like a reasonable possibility to say the least.

Should you buy stock in Energy Transfer right now?

Before you buy stock in Energy Transfer, consider this:

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.