5 Best Dividend Stocks to Buy According to Morgan Stanley’s Quant Screen

2. Energy Transfer L.P. (NYSE:ET)

Dividend Yield as of September 27: 8.73%

Total Expected Return: 34%

Number of Hedge Fund Holders: 36

On August 3, Energy Transfer L.P. (NYSE:ET) announced market-beating earnings for the fiscal second quarter of 2022. The company reported earnings per share of $0.39 and outperformed estimates by $0.01. The company generated a revenue of $25.95 billion, up 72% year over year, and beat expectations by $5.61 billion. As of September 27, Energy Transfer L.P. (NYSE:ET) has gained 17.3% year to date and Morgan Stanley expects the stock to gain 34% over the next few months.

Energy Transfer L.P. (NYSE:ET) is currently trading at a discount to its earnings. As of September 27, the stock is trading at a PE multiple of 8x and is offering a forward dividend yield of 8.73%, which the company backs with free cash flows of $5.8 billion.

On September 12, Energy Transfer L.P. (NYSE:ET) reported that its executive chairman, Kelcy Warren, purchased over 2.4 million shares of the company’s common stock at $12.04 per share.

This August, Barclays analyst Theresa Chen raised her price target on Energy Transfer L.P. (NYSE:ET) to $14 from $13 and maintained a buy-side Overweight rating on the shares.

At the close of the second quarter of 2022, 36 hedge funds were bullish on Energy Transfer L.P. (NYSE:ET) and held stakes worth $598.5 million in the company. As of June 30, Abrams Capital Management owns 22 million shares of the company and is the top shareholder.