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Energy Transfer: This Pipeline Giant Boasts A 10% Yield And Record Low Valuation

Published Mon, 11 Nov 2019 17:17:20 -0500 on Seeking Alpha

Markets have been racing to all-time highs thanks to low interest rates, trade optimism and better than expected jobs reports. The earnings season itself is almost over and generally has been a success with 75% of companies reporting having exceeded EPS estimates with top performers in Consumer Staples such as Apple (AAPL), Healthcare such as AbbVie (ABBV) and UnitedHealth Group (UNH), Information Technology such as Intel (INTC) and Financials such as JPMorgan Chase (JPM) leading the performance board.

image source: Getty images
At the bottom are Energy and Materials sectors where only around half of companies reporting have exceeded EPS estimates. Both sectors are dominated by the big integrated oil majors such as Chevron (CVX) and Exxon (XOM) and countless MLPs, for which EPS figures hardly matter, though, due to large swings in depreciation and amortization expenses.

Source: insight.factset.com
It is these sectors where yields have been racing higher and higher while at the same time distributable cash flow, the most important metric in these sectors, continues to climb or at least remain stable. Here we can find many ultra high-yield stocks with sufficient coverage that seem to drop every single day and are thus only suitable for the patient and risk-happy investor. One of these is pipeline giant Energy Transfer (NYSE: ET) with its generous and safely covered 10% distribution.
A pipeline giant at record low valuation with healthy coverage
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Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ABBVIE 70.83   26.0 2.72 4.28 6.28
EXXON MOBIL 71.98   17.3 4.15 3.48 4.83
CHEVRON 121.42   15.7 7.72 4.76 3.91
JPMORGAN CHASE 117.91   12.0 9.79 3.60 2.74
INTEL 53.01   12.4 4.29 1.26 2.43
UNITEDHEALTH GROUP 230.10   17.3 13.32 4.32 1.86
APPLE 223.08   19.0 11.73 3.08 1.42


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