Energy Transfer (ET +2.24%) is coming off a down year. The master limited partnership's (MLP) growth rate slowed considerably in 2025 due to more challenging market conditions and fewer growth catalysts. That weighed on its unit price, which slumped more than 15%.
While last year was a slower period, the high-yielding midstream giant (8.1% current yield) expects to stomp on the gas in 2026. Here's what the MLP sees ahead in the new year.
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A reacceleration in earnings growth
Energy Transfer's latest outlook for 2025 was that its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) would be slightly below the lower end of its $16.1 billion to $16.5 billion guidance range. This forecast implies its earnings grew less than 4% last year. That's a meaningful slowdown from the 10% compound annual earnings growth rate the MLP delivered from 2020 to 2024. Energy Transfer's growth slowed due to the impact of lower oil prices, fewer organic expansion project completions, and the lack of any acquisitions since mid-2024.
The pipeline company expects its growth to reaccelerate in 2026. The MLP's initial outlook is that it will generate between $17.3 billion and $17.7 billion of adjusted EBITDA in 2026. That implies its earnings will grow between 7.5% and 9.9% this year.
NYSE: ET
Key Data Points
Several catalysts will fuel the company's faster growth rate this year. Energy Transfer expects several new expansion projects to ramp up their volumes or come online in 2026. These include the Nederland Flexport NGL expansion, the Mustang Draw I & II gas processing plants, phase one of the Hugh Brinson pipeline, NGL projects on the Lone Star Express and Gateway Pipelines, and natural gas pipeline projects serving data center facilities in Texas.
Additionally, while Energy Transfer didn't complete any acquisitions in the past year, both of its affiliated MLPs recently made acquisitions. Sunoco LP closed its $9.1 billion acquisition of Parkland in November. Meanwhile, USA Compression Partners agreed to buy J-W Power Company for $860 million in December in a deal it expects to close in the first quarter of 2026. Energy Transfer records a portion of the growing earnings of its affiliates in its consolidated financial results.
Ramping up its investment rate
Energy Transfer expected to invest about $4.6 billion in growth capital projects last year, which is below its initial estimate of $5 billion. It anticipates investing even more capital this year. The MLP has set its initial growth capital spending range for 2026 at $5 billion to $5.5 billion.
That investment spending will enable the company to complete several projects this year while also funding construction on those that it will complete in future years. The most notable long-term expansion project is the Desert Southwest Pipeline. Energy Transfer recently upsized the pipeline from 42 inches to 48 inches, increasing its capacity to 2.3 billion cubic feet of natural gas per day. The project, which the company expects to finish by the fourth quarter of 2029, will now cost $5.6 billion.
The company sees the potential to approve additional growth capital projects this year. Its expansive gas infrastructure puts it in a strong strategic position to continue capitalizing on the growth in gas demand by power producers and data centers.
Energy Transfer's growth projects will give it the fuel to continue increasing its high-yielding distribution. The MLP has been returning more than half of its cash flow to investors each year. It continues to target distribution growth of 3% to 5% annually.
High-octane total return potential
Energy Transfer expects to hit the gas this year. It anticipates that its earnings growth rate will reaccelerate while also planning to invest even more capital into fueling future growth. That positions the MLP to continue increasing its high-yielding distribution. This combination of income and growth could power high-octane total returns for investors in the coming years, especially from its currently lower unit price following last year's slump.
