It’s Friday the 13th – but it’s been a good week for the markets, despite yesterday’s minor dip.
Both Treasury yields and the dollar are pulling back, inflation is still cooling, and stocks are bouncing.
Will this last – and for how long? Who knows.
On Monday, I’ll be back with three high-momentum short-term plays that could hand you some quick gains.
But since we’re about to head into the weekend…
I’m going to highlight a sweet yield play for all the income-focused investors reading this.
Today’s pick is from the classic “midstream energy player” pool – a pool that is just swimming with these lucrative income plays.
It has a forward dividend yield of over 9% – even after a nearly 14% increase in its stock price for the year.
It’s benefiting from the natural gas restriction resulting from the ongoing Russia-Ukraine war as well as the recent increase in oil prices…
And its high dividends are sufficiently covered by its cash flows.
On top of that, the company’s top management have been heavily investing their own money in the company’s stock.
And this isn’t some tiny player either – it’s a massive operation worth tens of billions of dollars.
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Energy Transfer LP (ET)
Energy Transfer is a $40B+ company that operates approximately 125,000 miles of pipelines across North America. Its sheer scale qualified it to be the one of the continent’s largest and most diversified midstream energy companies.
As mentioned, it currently pays a 9.2% forward dividend yield at a very reasonable P/E ratio of 11.5x. Its operating cash flows are also more than sufficient to cover its substantial payout – although it should be noted that ET’s payout ratios are a little higher than the industry average.
Still, ET has demonstrated very high resilience in the face of market turmoil. A large part of this is due to the scale and integration of its pipeline network, which enables substantial efficiencies.
Also, ET’s co-CEO spent $1.4 million of his own money purchasing the company’s stock in September. And in late August, the company’s chairman also plonked down nearly $40 million of his own to buy more shares. They have skin in the game.
Finally, Wall Street’s average price target for ET is $17 – about 25% higher than the current price. This means ET could not only deliver an incredible yield, but solid capital appreciation as well.
To your wealth,
Felix @ Ace of Investing