Dividend Stocks to Buy for Double-Digit Returns: Energy Transfer Equity LP (ETE)
Dividend Yield: 6.1%
I’ll start with one of my favorite long-term holdings, pipeline giant Energy Transfer Equity LP (NYSE:ETE).
Let’s start with the dividend. At current prices, ETE yields 6.1%. Dividend growth has been a little tepid of late, as the company overextended itself during the go-go years of the 2010s energy boom and is in the process of slowly deleveraging by retaining more of its cash. But this is a company that, as recently as a couple years ago, was improving its dividend at a 30% annual clip.
With a dividend yield of more than 6%, ETE doesn’t have to hit any home runs to generate a double-digit annual return. Even being the tortoise rather than the hare, 4% share price appreciation should be doable, and I expect it to be much better than that.
New wells in the Texas Permian Basin are profitable at prices as low as $20 per barrel. That tells me that domestic oil and gas exploration is here to stay, and midstream operators like ETE are going to be major beneficiaries.
I’ll admit I’m partial to Energy Transfer, as it was my winning pick in last year’s Best Stocks contest with a 53% return. I can’t say I expect every year to be like that. And in fact, ETE’s massive run last year was only made possible because of the beating the stock took the previous year.
But at today’s prices, ETE is definitely priced to deliver double-digit returns annually for a long time to come.