The energy sector is experiencing a remarkable rally in 2026, with S&P 500 energy stocks averaging over a 30% increase this year, significantly outpacing the index’s 3% decline. This surge is primarily driven by a dramatic rise in crude oil prices, which have nearly doubled amid ongoing geopolitical tensions, particularly the conflict with Iran. Amidst this backdrop, Energy Transfer (ET) has seen its units rise by more than 16%, although this growth lags behind broader energy stock performance.

Energy Transfer’s master limited partnership (MLP) business model provides a degree of stability, generating approximately 90% of its earnings from fee-based contracts rather than direct commodity price exposure. This structure protects the company during price downturns but limits its upside in a bullish market. With a current distribution yield of 7% and a target growth rate of 3% to 5% annually, Energy Transfer is positioned as a steady income generator rather than a high-risk, high-reward play.

For investors looking for stability amidst volatile energy prices, Energy Transfer offers a compelling option, emphasizing consistent cash flow and growth potential in natural gas infrastructure, rather than direct exposure to fluctuating crude prices.

Source: fool.com