Energy Transfer (ET) stock is having a dismal run in 2025 and is down 9.2% for the year. The stock has underperformed many of its midstream peers, and its return trails the Alps Alerian MLP ETF (AMLP), which is in the green this year.
One source of comfort for Energy Transfer investors has been its high dividend yield, which currently stands at almost 7.5% after the company announced an increase in its quarterly payout last month. In this article, we’ll explore whether ET stock is ready for a rebound after the frustrating YTD underperformance.
To begin with, let’s build an investment case for midstream companies that are primarily involved in the transportation, storage, and processing of energy products. While the midstream energy industry does not witness outsized growth, two drivers could help support higher growth over the next few years. The first is artificial intelligence (AI), where tech companies are increasing their investments, including towards power-guzzling data centers, which looks like a structural tailwind for the energy sector.
The second is President Donald Trump’s trade and tariff policy. The U.S. is looking to push defense and energy exports in a bid to bridge the trade deficit with trading partners with whom it has a large deficit. We saw this play out with the E.U., and something similar could be on the table as the U.S. eventually signs a trade deal with China and India, two of the world’s biggest energy importers.
However, despite the seemingly positive fundamentals, midstream energy stocks haven’t really rallied in 2025. This is in part due to the outperformance last year, where midstream stocks, including ET, delivered strong returns in anticipation of favorable policies under the Trump administration.
While midstream stocks in general are having a tepid year, ET's underperformance stands out. For midstream companies like Energy Transfer, incremental growth comes either from acquisitions or new growth projects. ET reported a 13% year-over-year rise in its 2024 earnings before interest, tax, depreciation, and amortization (EBITDA), which was primarily led by the acquisition of Crestwood Equity Partners and WTG Midstream. However, the company expects its EBITDA growth to be 5% at the midpoint for 2025, as there wasn’t any bump from inorganic growth as we saw last year.
