Energy Transfer remains attractive; strong dividend coverage supports future growth despite recent price appreciation.

Energy Transfer returned about 29% Let's just use Energy Transfer for example. If we jump back over to Seeking Alpha, look at Energy Transfer over the last 5 years. It's up 132% not including dividends.

And keep in mind, at multiple points over the last 5 years, this was a stock yielding over 9% in a lot of instances, over 8% in some instances as well. So, total returns have been incredibly strong.

One of the key metrics we use to value MLPs is enterprise value to EBITDA, earnings before interest, taxes, depreciation, and amortization. And what you'll notice is right now it is trading above its 5-year average.

And in fact, we can see that relatively simply when looking at the different valuation ratios for this MLP. It's trading above its historic average.

If we jump over to our dividend discount model, again, this is valuing the stock based on how much it's paying out in dividends and how much that dividend will grow in the future.

Now, historically, Energy Transfer has continued to grow dividends at a relatively healthy rate with a 3-year dividend growth rate of about 4.24%, and from my research, management is guiding towards around 3 to 5% dividend growth moving forward.

So, let's just assume the low end of that over the long term. At 3% dividend growth, this would be a stock worth around $24.63, implying around 15% upside from current prices. Energy Transfer 6.3%,

Now again, if we use Energy Transfer as an example, you can see their distributions are very well covered. Again, when talking about MLPs, the way we analyze dividend sustainability is by looking at distributable cash flow per share and the dividends they're paying out.

And so in 2026, they're projected to produce around $2.91 in distributable cash flow per share, while the dividend per share is only $1.37. So, the dividend is very well covered.

And this is why they're able to continue to grow at out a healthy rate while still funding growth internally, which ultimately will continue to drive distributable cash flow per share higher, which means intrinsic value is going to continue to climb, which again ultimately to summarize is why the stock still looks attractive despite the fact over the last 5 years it's up 132%.