Daily Stock Pick for August 15, 2023

Yesterday – as with every Monday – I recommended three stocks that could continue to surge this week.

These are short-term plays that cater to investors with a very specific time horizon.

So, for today, I’d like to switch focus to another group of investors – those who want income.

Because today’s stock pick is paying out a dividend yield that’s close to 10%…

And price-wise, it has been very stable lately, with its stock up about 10% this year.

On top of that, most analysts see its price rising further, with the consensus price target implying an over 30% upside over the next year.

And while the company plans to increase its dividends by 3–5% a year, a 30+% appreciation in the underlying stock price would definitely cause a decrease in the dividend yield…

Meaning now may be the best time to take a position in this high-yielding stock.

Energy Transfer LP (ET)

Energy Transfer is (obviously) in the energy industry. And like many of the top high-yield dividend players there, it operates in the midstream segment, which makes it less exposed to the cyclical nature of the industry – allowing it to maintain its consistent dividend payouts. 

In Energy Transfer’s case, it operates an extensive pipeline network for the transport of natural gas and crude oil, in addition to operating storage and processing facilities.

Its current dividend yield stands at 9.7% – but as I said, this is likely to decrease as analysts expect significant price appreciation for this stock over the next year. With the actuality of the “most predicted recession in the world” quickly fading away, things are looking good for the energy sector – something which factors into these optimistic price estimates.

From a dividend sustainability perspective, for the second quarter of 2023, Energy Transfer had nearly $600 million in excess cash flow after distributions (total distributable cash flow was over $1.5 billion). So, the probability that it can continue to slowly grow its dividend payouts remain high.

As I said, with a good chance of price appreciation on the horizon – plus a highly attractive dividend yield right now – this may be a good time to take a position on this stock.

To your wealth,
Felix @ Ace of Investing