17. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) ranks seventeenth on our list of the best dividend stocks of 2024. The Texas-based energy company is engaged in the pipeline transportation and storage for natural gas, crude oil, and other refined products. The company boasts one of the strongest growth projects in the midstream sector and is planning to allocate between $2.5 billion and $3.5 billion annually for growth capital expenditures (capex), driven by the opportunities it is encountering. During its most recent earnings call, the company highlighted strong interest from power generation firms and data center operators in natural gas pipeline projects, driven by the growing power demands from the expansion of AI infrastructure. With a 12-month return of nearly 41%, ET is one of the best dividend stocks of 2024.
Energy Transfer LP (NYSE:ET) has demonstrated strong operational and financial results this year, setting multiple volume records in Q3 due to organic growth and strategic acquisitions. In November, it acquired Crestwood Equity Partners for $7.1 billion, and in July, it completed the $3.1 billion acquisition of WTG Midstream. In addition, the company successfully finished two processing optimization projects: the Red Lake III processing plant and a pipeline connection between Midland and Cushing.
Patient Capital Management mentioned ET in its Q3 2024 investor letter. Here is what the firm has to say:
“Energy names disappointed in the quarter following commodity prices lower throughout the period. We took the opportunity to add to our highest conviction ideas. We look to names that have idiosyncratic opportunities and are attractive in a variety of different commodity price environments. Many see risk to energy prices over the next year as supply is expected to outstrip demand by 1.3mb/d even before assuming any incremental OPEC supply comes onto the market. With commodities, consensus is rarely right. We assess companies on through cycle returns and normalized prices. From this perspective, we see a handful of attractive opportunities, including Energy Transfer LP (NYSE:ET), Seadrill (SDRL) and Kosmos (KOS).
Our ownership of Energy Transfer began in 2019 with the belief that the limited supply of new pipelines would provide attractive pricing opportunities over the long-term. At the same time, the company was paying us an attractive dividend (10% yield over the period). So far this investment thesis has largely played out, but we continue to see an attractive long-term setup for the name given our belief that natural gas will be a key ingredient to bridge us to a net carbon neutral world.”
Energy Transfer LP (NYSE:ET) also reported a solid cash position in its most recent quarter. Distributable cash flow (DCF), which reflects the cash generated before growth capital expenditures, increased by $4 million, reaching $1.99 billion. The company saw strong volumes across its systems, setting several volume records during the quarter. On October 28, Energy Transfer declared a 0.8% increase in its quarterly dividend to $0.3225 per share, marking the 12th consecutive quarterly dividend increase. The stock supports a dividend yield of 6.59%, as of December 30.
As per Insider Monkey’s database of Q3 2024, 29 hedge funds held stakes in Energy Transfer LP (NYSE:ET), compared with 32 in the previous quarter. These stakes are collectively valued at over $965.5 million.
