Energy Transfer Just Delivered a Monster Quarter. Is Its High-Yielding Stock a Buy?

Energy Transfer delivered an impressive third quarter, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growing by over 30%. The energy midstream company also raised its full-year outlook by $850 million and generated cash flow to cover its high-yielding distribution more than twice. Analysts are now questioning whether this 6.7%-yielding pipeline stock is a buy.

Energy Transfer isn't your typical slow-growing master limited partnership (MLP). The company reported $5 billion in adjusted EBITDA for the quarter, a massive 31% increase compared to the previous year. Distributable cash flow skyrocketed 33% to $2.5 billion. Strong market conditions, recently completed expansion projects, and acquisitions all contributed to the monster quarter.

The company raised its full-year adjusted EBITDA guidance again, now expecting $19.7 billion–$19.9 billion, a $850 million increase or about 4.5% from its previous range. This growth is partly due to acquisitions like Sunoco's Parkland and USA Compression's J-W Power, as well as robust market conditions, particularly higher export volumes due to Middle East supply disruptions.

While the MLP lowered its 2026 growth capital spending range, it remains at the top of its initial guidance ($5 billion-$5.5 billion). Investors shouldn't read this as a slowdown, as Energy Transfer expects growth capital spending to increase to around $7 billion in 2027. The company recently acquired Vaquero Midstream for $2.6 billion, which should be immediately accretive to its per-unit distributable cash flow.

With $7.8 billion in distributable cash flow through the first nine months of the year, covering its 6.7%-yielding payout by 2.2 times, Energy Transfer seems like a buy for investors seeking income and solid total return potential.