"The High-Yielding Dividend Stock Ranked Among the Top 7.5% Just Extended Its Projected Growth Trajectory to the Year 2030"
Energy Transfer, a leading energy infrastructure company, is seeing a surge of interest in gas supplies from power plant and data center developers. This interest is set to provide the company with substantial incremental sources of cash flow through the end of the decade, enhancing its future growth visibility.
The company has a list of organic expansion projects scheduled to enter commercial service by the end of 2023, which are expected to drive cash-flow growth in 2026 and 2027. Among these projects is the Transwestern Pipeline Desert Southwest Expansion, a 516-mile pipeline from the Permian Basin to Arizona, New Mexico, and Texas, including nine compressor stations. With a design capacity of 1.5 billion cubic feet per day (Bcf/d), the Transwestern Pipeline is expected to be in service by Q4 2029 at a cost of approximately $5.3 billion, supported by long-term commitments from customers.
Another significant project is the Hugh Brinson Pipeline, which consists of Phase I and II. Phase I is expected to provide about 1.5 Bcf/d natural gas takeaway capacity from the Permian Basin, with a planned completion by Q4 2026. Phase II includes additional compression facilities and has reached a positive final investment decision.
In addition to these projects, Energy Transfer is also planning to upgrade its Delaware Basin NGL Pipe Looping to boost its natural gas liquids (NGLs) pipeline system's capacity by 100,000 barrels per day. The project is expected to be completed in the first half of 2027.
The company is also working on increasing its storage capacity. A new storage cavern at the Bethel Natural Gas Storage Facility is expected to double its working gas storage capacity, although a specific completion date has not been announced.
Energy Transfer's growth outlook has improved due to additional expansion projects recently added to its backlog. The company currently expects to increase its payout by 3% to 5% per year. Energy Transfer is also seeking additional equity partners for the Lake Charles LNG facility and is in advanced discussions with several potential customers for the remaining capacity.
The combination of growth and income makes Energy Transfer a potential for attractive total returns in the coming years. The company recently reported its second-quarter financial results and provided an update on its growth projects. Energy Transfer has several other projects under development, including an NGL pipeline expansion, a large offshore oil export terminal, a blue ammonia hub, and a carbon capture and storage project.
It's worth noting that Energy Transfer sends a Schedule K-1 federal tax form to its investors each year. Long-term sales contracts have been signed with Chevron and a Japanese energy company for the Lake Charles LNG facility. MidOcean Energy has been secured as a 30% equity partner for the Lake Charles LNG facility. The Hugh Brinson Pipeline Phase II is expected to enter commercial service by the end of 2026 at a cost of $2.7 billion. Lastly, the MLP plans to construct a new storage cavern to double its Bethel gas storage capacity by late 2028.
[1] Energy Transfer Announces Plans for Major Expansion Projects [2] Energy Transfer to Expand Transwestern Pipeline [3] Energy Transfer Announces Hugh Brinson Pipeline Expansion [4] Energy Transfer to Upgrade Delaware Basin NGL Pipe Looping [5] Energy Transfer to Build New Storage Cavern at Bethel Natural Gas Storage Facility
- Investing in Energy Transfer's shares could lead to substantial returns due to its planned major expansion projects, such as the Transwestern Pipeline Desert Southwest Expansion, the Hugh Brinson Pipeline, and the Delaware Basin NGL Pipe Looping upgrade, which are expected to drive cash flow and growth.
- Energy Transfer is also set to enhance its investment opportunities in the energy industry through initiatives like expanding the Transwestern Pipeline, designed to carry 1.5 Bcf/d of gas and supported by long-term customer commitments.
- By venturing into organic expansion projects, Energy Transfer aims to improve its finance infrastructure and creating more opportunities for investing, such as increasing storage capacity at the Bethel Natural Gas Storage Facility and the construction of a new storage cavern for increased working gas storage capacity.
