When market volatility spikes, investors often turn to stable dividend-paying stocks, and the energy sector is a prime hunting ground for such opportunities. However, many energy stocks are highly cyclical, and falling commodity prices can erode their profits and jeopardize dividends—posing risks for investors who don’t closely track oil and gas prices. Rather than blindly betting on blue-chip energy stocks, it’s wiser to distinguish between cyclical plays and evergreen performers. Energy Transfer (ET) stands out as a prime example of the latter. This midstream pipeline operator remains largely unscathed by macroeconomic headwinds and has become a safe haven in chaotic markets, thanks to its hefty payouts. Here’s why it’s a compelling investment:
As a midstream company, Energy Transfer provides pipeline transportation and storage services for energy products like natural gas and crude oil, with operations spanning over 40 U.S. states and multiple countries. Its “toll road” business model generates revenue by charging fees for infrastructure usage, making it highly insensitive to energy price fluctuations. As long as pipelines keep flowing, earnings remain stable.
Structured as a Master Limited Partnership (MLP), the company combines tax advantages with liquidity. From 2014 to 2024, its Earnings Per Unit (EPU) and Adjusted EBITDA grew at compound annual rates of 8% and 11%, respectively, even weathering crises like the pandemic, inflation, and geopolitical conflicts. For 2025, the company projects EBITDA growth of 4%-6%, while analysts forecast EPU growth as high as 16%.
Though it slashed payouts during the 2020 crisis, Energy Transfer has since raised its quarterly dividend 13 times in a row. The current annualized dividend of $1.31 per unit is fully covered by the 2025 EPU estimate of $1.33, translating to a 7.6% yield—far outpacing the 10-year Treasury yield. If interest rates decline, this advantage could attract even more income-focused investors.
While not a traditional AI play, Energy Transfer is quietly capitalizing on the boom in power-hungry data centers. To meet surging demand, the company is not only expanding Permian Basin capacity but also supplying gas to AI data centers in Texas via a partnership with CloudBurst. It has also received potential connection requests from roughly 200 data centers and 60 power plants across 14 states.
Despite potential environmental regulatory pressures, Energy Transfer’s diversified operations and risk resilience make it a top pick for conservative investors in volatile markets. Its business durability, dividend security, and valuation upside provide ample justification for a “buy and hold” strategy.
