Is Energy Transfer the Best Ultra-High-Yield Dividend Stock to Buy Right Now?

Core Viewpoint - The article discusses the identification of ultra-high-yield dividend stocks, defining "ultra-high" as a yield four times greater than the current S&P 500 yield of approximately 4.4%, resulting in around 1,800 qualifying stocks [1]. Group 1: Energy Transfer as a Candidate - Energy Transfer is highlighted as a potential leading ultra-high-yield dividend stock with a yield of approximately 7.9% [3]. - The company is noted for the sustainability of its distribution, despite a high earnings-based payout ratio of 100%, as it generates sufficient distributable cash flow [4]. - Management anticipates consistent distribution growth of 3% to 5% annually [4]. Group 2: Financial Performance and Valuation - Energy Transfer's adjusted EBITDA is projected to grow at a compound annual growth rate of 10% from 2020 to 2024, driven by increasing power demand from AI data centers [5]. - The company's forward price-to-earnings ratio is low at 9.7, and its trailing-12-month enterprise value-to-EBITDA is among the lowest in its peer group, indicating attractive valuation [6]. Group 3: Concerns and Historical Context - Despite its advantages, Energy Transfer has faced criticism due to a distribution cut in 2020 linked to the COVID-19 pandemic, which raises concerns about its distribution track record [9]. - The article mentions that while the company has increased its distribution in recent years, the past cut remains a significant point of contention [9].