The energy sector is off to a roaring start in 2026. Crude oil prices have rallied over 15% to start the year. That's fueled a more than 20% gain in the average energy stock in the S&P 500.
I think the energy sector has plenty of fuel to continue rallying in 2026 and beyond. That's why I plan to continue buying energy stocks this March. The first one I plan to purchase is Energy Transfer (ET 1.01%). Here's why I can't wait to add to my position in the master limited partnership (MLP) this month.
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Stomping on the gas in 2026
Energy Transfer's earnings growth rate slowed last year due to the impact of lower oil prices, fewer organic expansion project completions, and no new acquisitions. However, this year will be a much different story. Energy Transfer expects to generate between $17.5 billion and $17.9 billion of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) this year. That implies 9.2% to 11.7% year-over-year growth from last year's level. That's a major acceleration from the 3.2% earnings growth rate Energy Transfer delivered in 2025.
In addition to the impact of higher oil prices, Energy Transfer expects to benefit from the completion and ramp-up of several expansions. It completed its Nederland Flexport NGL expansion last year. Meanwhile, the company expects to complete its Mustang Draw I & II plants, phase I of its Hugh Brinson Pipeline, and several projects to supply gas to data centers in 2026.
NYSE: ET
Key Data Points
Additionally, both its affiliated MLPs recently closed acquisitions. Sunoco LP bought Parkland in a $9.1 billion deal, while USA Compression Partners closed its $860 million acquisition of J-W Power.
Lots more growth ahead
Energy Transfer should continue growing at an accelerated rate in the coming years. It's investing between $5 billion and $5.5 billion into growth capital projects this year. That capital will help fund expansions entering service this year, as well as those with later in-service dates.
For example, Energy Transfer expects to finish phase II of the $2.7 billion Hugh Brinson pipeline early next year, while completing the $5.6 billion Transwestern Pipeline expansion project in the fourth quarter of 2029. Overall, Energy Transfer has projects scheduled to enter commercial service through the first quarter of 2030.
Meanwhile, the company has more projects under development. Many of its potential projects will expand its gas pipeline infrastructure to support growing demand by AI data centers and power generation facilities.
Energy Transfer's growing earnings should give it the fuel to continue increasing its high-yielding distribution (7.2% current yield). It aims to increase that payout by 3% to 5% each year.
High-octane total return potential
Energy Transfer's growth rate is accelerating as it completes expansion projects. It has many more expansions under construction and even more in development. Add that growth to its high-yielding distribution, and Energy Transfer could deliver high-octane total returns in 2026 and beyond. That strong return potential is why I plan to make it the first energy stock I buy this month.
