Energy Transfer Could Spend Up to $5.9 Billion on Growth Capex This Year. Here's Why That Matters for Investors.

Energy Transfer (ET) raised its 2026 growth capital expenditure guidance to $5.5-$5.9 billion, up from prior levels, to fund natural gas infrastructure projects tied to AI data center demand and expanding gas-to-electricity conversion. The company is deploying billions into pipeline and processing capacity as tech companies race to secure power for compute-intensive operations.

ET maintains a 6.77% dividend yield backed by strong EBITDA and distributable cash flow. Management plans to increase distributions 3-5% annually while bankrolling the construction wave. The midstream operator's financial metrics remain solid enough to cover both the payout and the elevated capex through 2026.

The trade-off: valuation compression in the near term. With billions locked in multi-year construction projects, free cash flow won't inflect meaningfully until late 2027 through 2028, when facilities come online and capital spending moderates. The stock may underperform peers until that inflection nears, even as the infrastructure buildout positions ET for higher cash generation in the back half of the decade.