Bill Gross said he loves the company’s 10% dividend yield.
The stock has formed a rising wedge pattern on the weekly chart.
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Energy Transfer (NYSE: ET) stock has been stuck in a range in the past few weeks even after the company published strong results. The shares were trading at $12.33, where it has been in the past few days. They have soared by about 12% this year and by 362% from the lowest point in 2022.
Energy Transfer is one of the biggest energy partnership companies in the world. The company’s revenue has been growing rapidly during the commodity supercycle. After falling to $38.3 billion in 2020, the company’s revenue soared by more than $89 billion in 2022. It also moved from a loss of $647 million in 2020 to over $4.7 billion in 2022.
Energy Transfer stock price has moved sideways after the company published strong financial results. In a statement, the company said that its EBITDA came in at $3.43 billion in Q1. Its DCF attributable to partners came in at $2.01 billion compared to $2.08 billion in the same quarter in 2022. This happened as the average volumes jumped to 949k barrels per day compared to 804k barrels.
Further, Energy Transfer upgraded its outlook for the coming year. It expects that its adjusted EBITDA will be between $13.05 billion and $13.45 billion.
In an interview with Bloomberg, Bill Gross, the billionaire founder of PIMCO said that he had invested in Energy Transfer. He cited the company’s partnership model and the fact that it has a healthy and safe dividend yield. As a partnership, the company does not pay corporate taxes. Instead, taxes are paid by shareholders at their individual tax rate.
The company has a trailing dividend yield of 8.96% and a forward yield of 9.95%. These payouts are supported by a healthy payout ratio of 59%. Further, as I wrote in this article, Energy Transfer is a highly undervalued company trading at a PE multiple of 9.17.
Energy Transfer is a good company to invest in. However, technicals suggest that the shares will likely retreat in the next few months. The shares have formed what looks like a rising wedge pattern that is shown in orange. In price action analysis, this pattern is usually a bearish sign.
Therefore, there is a likelihood that the shares will have a bearish breakout as sellers target the next key support at $10. In the long term, however, the shares will likely bounce back as buyers target the 2014 high of $17.94.
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Energy & Power