According to data from S&P Global Market Intelligence, shares of pipeline company Energy Transfer (ET) surged 42% in 2024, significantly outperforming the S&P 500 Index, which provided a robust return of 23% last year. When factoring in Energy Transfer’s substantial cash distributions (assuming reinvestment), the total return for Energy Transfer reached nearly 54%, widening the gap with the S&P 500’s total return of 25% last year.
Let’s explore the factors driving Energy Transfer’s strong performance in 2024, and whether it can surpass the market again in 2025.
Energy Transfer entered 2024 with strong momentum after completing two acquisitions in 2023 (Lotus Midstream and Crestwood Equity Partners), which contributed to last year’s growth. These growth drivers helped the company set multiple transportation volume records in the third fiscal quarter, leading to a projected 12% earnings growth. This growth enabled the company to steadily increase its dividend, with a year-over-year increase of 3.2% in the third fiscal quarter.
The acquisition trend continued for Energy Transfer last year, with the July acquisition of WTG Midstream. In 2024, the company also embarked on several new organic expansion projects, the largest of which is the $2.7 billion Hugh Brinson pipeline, set to come online by the end of 2026, providing additional gas transport capacity to the Permian Basin. The company expects to keep securing new expansion projects. Furthermore, artificial intelligence (AI) data centers are emerging as a potential strong growth catalyst, helping Energy Transfer expand its natural gas pipeline network to meet the anticipated surge in electricity demand over the coming years.
Entering 2025 with strong momentum, Energy Transfer expects several expansion projects to come online by mid-year. Additionally, there are further growth catalysts such as the potential approval of new expansion projects (like the highly anticipated Lake Charles project) and a possible initiation of a unit repurchase program for returning more cash to shareholders. The company clearly has a solid array of potential sources to achieve another strong total return in 2025.