The idiom “Once bitten, twice shy” suggests that someone who has been hurt or disappointed becomes more cautious or hesitant to take risks in similar situations. This applies not only to personal experiences but also to dividend investors. Those who have faced a dividend cut may be reluctant to invest in those shares again, particularly with Energy Transfer (NYSE: ET), which cut its dividend in 2020 due to the pandemic’s financial strains.
After this cut, Energy Transfer’s annualized dividend fell to $0.61 but rebounded to $0.70 by late 2021, showcasing a commitment to increasing payouts. Currently boasting a yield of 6.8%, the company has raised its dividend over the past 19 quarters, restoring some investor confidence.
Energy Transfer’s financial stability is reflected in its strong distributable cash flow (DCF) coverage ratio of 2.2, significantly exceeding the preferred ratio, indicating a healthy ability to support its dividend. As the company reduces its debt, it further positions itself for growth and sustainability.
However, potential investors are advised to consider other options as the Motley Fool’s Stock Advisor did not include Energy Transfer among its top stocks for long-term growth.
