Energy Transfer L.P. (NYSE: ET) is rewarding its shareholders once again with a quarterly dividend of $0.325, payable on Wednesday, Feb. 19. That is about 0.78% higher than the prior payout.

This high-yield dividend payer has grown through acquisitions, and it just reported solid quarterly results that fell short of expectations. The ongoing dividend payment underscores management’s commitment to delivering consistent value to investors.

Why Investors Like Dividends

Investors favor dividend stocks for two main reasons. The first is that they offer enticing total return potential. Total return is a comprehensive measure of investment performance that includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation. It is one of the most effective ways to boost the prospects of overall investing success.

Dividend stocks can also provide investors with a steady, reliable stream of passive income. Passive income is money that is earned with little to no ongoing effort, usually from assets that generate cash flow. This income can come from a variety of sources, including stock dividends. Generating passive income is a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

Energy Transfer’s Dividend

Energy Transfer’s dividend has increased incrementally in each quarter since late 2021, when the payout was $0.1525. That works out to be a compound annual growth rate of more than 21% since then. While the payout has varied, the company has paid a quarterly dividend since it went public in 2006.

The current dividend yield is about 6.4%, which is higher than the industry and sector averages, as well as much higher than the Dow Jones industrial average figure. Energy Transfer’s share price is around 269% higher since the initial public offering. So it has offered investors growth along with income.

Energy Transfer, the Company

The company owns and operates natural gas transportation pipeline and natural gas storage facilities in Oklahoma and Texas, as well as approximately 20,090 miles of interstate natural gas pipeline. It also sells natural gas to electric utilities, independent power plants, local distribution and other marketing companies, and industrial end-users.

In addition, the company owns and operates:

• Natural gas gathering pipelines, processing plant, and treating and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, Ohio, Oklahoma, Arkansas, Kansas, Montana, North Dakota, Wyoming, and Louisiana
• Natural gas gathering, oil pipeline, and oil stabilization facilities in South Texas
• About 5,700 miles of natural gas liquid (NGL) pipeline; NGL fractionation facilities; NGL storage facilities; and other NGL storage assets and terminals
• Approximately 14,500 miles of crude oil trunk and gathering pipelines in the Southwest, Midcontinent, and Midwest United States

Also, it transports and supplies water to natural gas producers in Pennsylvania; provides crude oil transportation, terminalling, acquisition, and marketing activities; and sells and distributes gasoline, middle distillate, and motor fuels and other petroleum products. The company also offers natural gas compression services and carbon dioxide and hydrogen sulfide removal services. It manages coal and natural resources properties, as well as sells standing timber, leases coal-related infrastructure facilities, collects oil and gas royalty, and generates electrical power.

Its headquarters are in Dallas. The company was founded in 1996 and went public in February 2006. Since 2011, it has grown through its acquisition of Sunoco and others. Now it competes with or is similar to, among others:

• Enterprise Products Partners L.P. (NYSE: EPD)
• Kinder Morgan Inc. (NYSE: KMI)
• Plains All American Pipeline L.P. (NASDAQ: PAA)
• Williams Companies Inc. (NYSE: WMB)

Fourth-quarter earnings fell short of expectations as revenue lagged. The pipeline company also said it would supply natural gas to an artificial intelligence data center in Texas. Meanwhile, Greenpeace has filed a suit against Energy Transfer in a Dutch court. Last year, the company completed its acquisition of WTG Midstream.

Energy Transfer, the Stock

The share price is 67% or so higher than five years ago, outperforming the Dow Jones industrials. Year to date though, its less than 4% gain is less than that of the S&P 500. Shares recently hit a multiyear high of $21.45. The $22.67 mean price target signals about 13% upside in the 12 months. All but two of the 17 analysts who follow the stock recommend buying shares, five of them with Strong Buy ratings. Stifel just maintained its Buy rating and Barclays reiterated its Overweight rating last month. Jim Cramer also favors the stock.

Energy Transfer also is a top pick of billionaires David Abrams, Lee Cooperman, and David Teppers. Institutional investors hold more than 33% of the shares. Blackstone and Goldman Sachs have notable stakes. Note that more than 37 million shares, or over 1% of the float, are held short. Also, there have been no notable insider transactions in the past few months.

Prediction: This Energy Stock Will Be the Best Performer in 2025

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