Beat the market. That is the goal of most investors. However, achieving that goal is often easier said than done.
However, for quite a few U.S. Senators and Representatives, things weren’t difficult last year. More than 30 of them managed to beat the market, with some of them posting gains more than four times the market. S&P500. Meet the ultra-high-yield dividend stock that helped a member of Congress earn a 122% return last year.
Rep. Mark Green’s Income Machine
Rep. Mark Green, R-Tenn., was the second-best stock trader in Congress in 2023. He returned 122%. How did the GOP representative do that? Particularly because of his investments in energy shares, one of which is particularly eye-catching.
Energy transfer LP (NYSE:ET) has been an important part of Green’s portfolio for several years. The company is a leader in the North American midstream energy sector. Energy Transfer operates approximately 125,000 miles of pipelines transporting crude oil, natural gas and natural gas liquids (NGLs).
Probably the biggest reason why many investors are attracted to Energy Transfer is its distribution. The midstream energy company’s distribution yield is currently above 7.2% and was even higher for most of last year.
Why Energy Transfer Was a Big Winner for Rep. Green
Shares of Energy Transfer (technically called units because the company is a limited partnership) rose 16% in 2023. Rep. However, Green from selling units multiple times last year was likely much higher as Energy Transfer delivered even bigger profits in 2021 and 2022.
One reason Energy Transfer was such a big winner for Green is that energy stocks in general have rebounded strongly since the crash during the early stages of the COVID-19 pandemic. At one point in March 2020, Energy Transfer lost about two-thirds of its market capitalization.
It also helped that the company reported solid quarterly earnings results multiple times in 2023. Energy Transfer started the year exceptionally well with strong first-quarter earnings and raised its full-year guidance for adjusted earnings before interest, taxes and depreciation. and depreciation (EBITDA).
The company’s dealmaking was also a key factor in its performance. Energy Transfer completed the acquisition of Lotus Midstream in May 2023 and completed the acquisition of Crestwood Equity Partners in November 2023.
Rep. Green owned other stocks that were important in his market-boosting return last year. For example, NGL Energy Partners LPanother midstream energy stock, shot up 360%.
Is Energy Transfer a good stock to buy now?
I think Energy Transfer is a good stock to buy for some investors right now. Anyone looking for income will appreciate the ultra-high distribution yield. The company expects to grow its distribution by 3% to 5% annually.
Value investors should also find Energy Transfer attractive. The units trade at less than 9.6 times forward earnings. By comparison, the energy sector’s profit margin in the S&P 500 is almost 13.
Growth investors may prefer other stocks with even stronger growth prospects than Energy Transfer. However, the midstream energy company could be a better option than you might think. Analysts expect Energy Transfer’s profits to grow by an average of 15.8% annually over the next five years.
Do you now have to invest € 1,000 in energy transfer?
Consider the following before purchasing shares in Energy Transfer:
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Meet the Ultra-High Yield Dividend Stock That Helped One Congressman Generate a 122% Return Last Year, originally published by The Motley Fool
