Should You Buy Energy Transfer Stock While It's Trading Below $20?

Core Viewpoint - Energy Transfer (ET) is a midstream master limited partnership (MLP) offering a high yield of 7.8% supported by a growing distribution, but potential investors should consider its past distribution cut and management decisions before investing while the stock trades below $20 [1][4][9] Company Overview - Energy Transfer operates in the midstream sector, facilitating the transportation of oil and natural gas from production sites to consumption points, primarily earning fees for asset usage, which provides reliable cash flows even during downturns in the energy industry [1][3] - The company also serves as the general partner for two other publicly traded MLPs: Sunoco, which delivers gasoline, and USA Compression Partners, which offers compression services for pipelines, alongside overseeing liquefied natural gas projects [3] Distribution and Financial Performance - The quarterly distribution has been consistently increased since Q4 2021, indicating a positive trend in cash flow and distribution growth [1] - Despite the attractive yield, the company previously cut its distribution by 50% during the COVID-19 pandemic to reduce balance sheet leverage, raising concerns about income consistency for potential investors [5][6] Management and Trust Issues - The company faced scrutiny over its decision to back out of a significant acquisition of Williams in 2016, which raised questions about management's trustworthiness and decision-making, particularly as the former CEO, who was involved in the deal, is now the chairman of the board [7][8] Competitive Landscape - While Energy Transfer's high yield and reliable cash flows may appeal to some income investors, alternatives such as Enterprise Products Partners and Enbridge are suggested, which offer attractive yields of 7% and 5.8% respectively, along with a history of consistent annual distribution increases and no controversial acquisition history [9]