2 hours ago
1
Matt DiLallo, The Motley Fool
Mon, April 20, 2026 astatine 7:05 AM CDT 5 min read
Let maine commencement by saying that Energy Transfer (NYSE: ET) is 1 of my favourite income stocks. I person held units of the maestro constricted concern (MLP) since 2020 and routinely adhd to my position. It's 1 of my largest sources of passive dividend income.
However, I deliberation investors seeking a harmless income play should hide astir Energy Transfer. Instead, they should bargain midstream dividend elephantine Enbridge (NYSE: ENB) to cod its rock-solid income stream.
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Enbridge is North America's vigor infrastructure leader. It transports 30% of the lipid produced connected the continent and 20% of the state consumed successful the U.S. The Canadian institution besides operates the largest earthy state utility by measurement and is simply a person successful renewable vigor investment.
While Energy Transfer besides has a ample and diversified vigor midstream footprint, it doesn't person the scale, diversification, oregon gross stableness of Enbridge. About 90% of Energy Transfer's net travel from fees, with 5% to 10% tied to commodity prices. On the different hand, much than 98% of Enbridge's net travel from regulated oregon take-or-pay contracts, with little than 1% tied to commodity prices. As a result, it produces precise unchangeable earnings. Enbridge's net are truthful predictable that it has achieved its yearly fiscal guidance for 20 consecutive years. Meanwhile, Energy Transfer's net fell abbreviated of its archetypal fiscal expectations past twelvemonth owed to little commodity prices.
One origin helping heighten the stableness of Enbridge's net is its earthy state inferior franchise. Gas utilities make precise resilient net owed to dependable request and government-regulated complaint structures. Enbridge besides has a increasing renewable powerfulness business, which generates precise unchangeable currency travel from long-term, fixed-rate powerfulness acquisition agreements. These businesses further diversify and stabilize Enbridge's net profile.
Energy Transfer is presently successful the strongest fiscal presumption successful its history. The MLP has utilized immoderate of its retained currency travel implicit the past respective years to fortify its equilibrium sheet. As a result, its leverage ratio is present successful the little fractional of its 4.0-4.5 times people range. That supports the company's coagulated investment-grade recognition ratings (BBB/Baa2).
Enbridge really has a higher leverage ratio (4.5x-5.0x people range). However, the institution has a higher recognition standing (BBB+/Baa2). That's owed to its larger scale, greater diversification, and lower-risk net profile.
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