Prediction: After Slumping by 12% So Far This Year, This High-Yield Dividend Stock Is Poised to Bounce Back Big-Time

Key Points

• Energy Transfer's growth engine has slowed this year.

• It could rev back up in 2026 as its current slate of growth capital projects begins to boost its bottom line.

• The MLP also has ample capacity to make another acquisition to accelerate its growth rate.

• 10 stocks we like better than Energy Transfer ›

Energy Transfer (NYSE: ET) units have declined by more than 12% this year, significantly underperforming the S&P 500's 10% gain in 2025. This slump has boosted its dividend yield to 7.7%.

While the master limited partnership's (MLP) value is currently down, I see a big bounce back ahead. Here are two factors fueling that view.

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About to heat back up again

Energy Transfer is coming off a fantastic year in 2024. The MLP grew its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 13% while delivering a 10% increase in its distributable cash flow. Fueling that robust growth was a combination of acquisitions (Crestwood Equity Partners in late 2023 and WTG Midstream last July), organic expansion projects, and strong market conditions. This robust growth helped power a 42% spike in its unit price last year.

This year tells a different story. Energy Transfer currently expects its adjusted EBITDA to end the year at or below the low end of its $16.1 billion to $16.5 billion guidance range, implying a growth rate of less than 4%. Unlike last year, the pipeline company hasn't completed any acquisitions and has only finished a few small organic expansion projects. In addition, cooling energy market conditions, driven by lower oil prices, have weighed on its results.

Though growth has slowed this year, momentum appears poised to shift again and reaccelerate in 2026 and beyond. Energy Transfer currently expects to invest $5 billion into organic expansion projects this year. Several have recently entered commercial service, including new gas processing plants in the Permian Basin and the initial service of its Nederland Flexport NGL expansion. By the end of next year, several more projects -- including another Permian gas processing plant, phase 1 of its Hugh Brinson Pipeline, and a new NGL fractionator at its Mont Belvieu complex -- are on track to begin commercial operations. These growth projects should provide meaningful incremental income in 2026 and 2027, which I anticipate will fuel a rebound in the unit price.

Looking further ahead, Energy Transfer has additional projects planned with in-service dates through the end of the decade. Among them: phase 2 of Hugh Brinson in 2027, the Bethel storage expansion project in 2028, and the $5.3 billion Desert Southwest Expansion project in 2029. Several other expansion projects, including Lake Charles LNG, are under development and could add to the company's long-term upside potential.

Another needle-moving acquisition seems likely

Acquisitions have played a major role in powering Energy Transfer's growth. Since 2019, the company has struck several deals, including purchases of SemGroup, for $5 billion in 2019; Enable Midstream, for $7 billion in 2021; Crestwood Equity, for $7.1 billion in 2023; and WTG Midstream, for $3.3 billion in 2024. Together, these deals have helped drive 10% compound annual adjusted EBITDA growth from 2020 through 2024.

Looking ahead, I expect the MLP to continue making acquisitions to enhance its growth rate. Energy Transfer is in an excellent position to pursue deals. It's currently sitting in the best financial shape in its history, with a leverage ratio in the lower half of its 4.0 to 4.5 target range. This provides the company with ample financial flexibility to capitalize on opportunities as they arise. Securing the right deal could accelerate earnings growth and has the potential to help fuel a rebound in the MLP's unit price.

In addition to doing deals on its balance sheet, Energy Transfer will continue to benefit from acquisitions made via its affiliated MLPs. For example, Sunoco LP acquired NuStar for $7.3 billion last year and has recently agreed to purchase Parkland for $9.1 billion. These deals are helping fuel accelerated earnings growth for Sunoco, which is also benefiting Energy Transfer's bottom line due to its meaningful stake in the MLP.

Dual growth drivers should fuel a rebound in the MLP

Energy Transfer's unit price has been in a slump this year due to a meaningful decline in its growth rate. However, with growth set to reaccelerate in 2026 and 2027 as the MLP's current slate of capital projects enters commercial service, its unit price should follow suit. It also has the potential to add more fuel to its growth engine by making another significant acquisition. These catalysts drive my view that the MLP can bounce back sharply in the coming quarters.

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Matt DiLallo has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.