To qualify for an annual dividend of $5,000 from Energy Transfer, approximately how many shares should you possess?
Investing in Energy Transfer, an MLP, can be a lucrative move for income-seeking investors. Boasting a whopping 6.1% yield, it significantly outshines the S&P 500's modest 1.2% dividend yield. To net a yearly $5,000 from Energy Transfer, you'd require roughly 3,876 units (approximately $81,400 at a unit price of $21) if we consider the quarterly payout of $0.3225 per unit.
This is a substantial investment, yet it's considerably less than the required investment to yield the same annual income from an alternative like the Vanguard S&P 500 ETF (VOO). With its 1.2% yield and $6.70 per share in annual dividends, you'd need an impressive sum of around $417,690 in this ETF to earn $5,000 annually.
One appealing aspect of Energy Transfer is its commitment to increasing its distribution payment annually, having raised its payout by 3.2% in the past year. This aligns with its stated goal of boosting its distribution quarterly by 3% to 5% annually. This growth is driven by strategic accretive acquisitions and a growing pipeline of organic expansion projects.
(Enrichment Data):
- Energy Transfer currently pays a quarterly cash distribution of $0.325 per unit, yielding approximately 6.5% based on the current unit price.
- The Vanguard S&P 500 ETF has a dividend yield of 1.21% with an annual dividend payment of $6.71 per share.
To calculate the required investment amount for $5,000 annual income from Energy Transfer units, we would need to know the current unit price. Given this information, we can calculate the approximate number of units required for the desired income. Assuming a static unit price for illustrative purposes, a $5,000 income would require approximately 3,846 units of Energy Transfer units.
This investment in Energy Transfer offers the opportunity for higher returns, as a $5,000 annual income can be achieved with approximately 3,846 units at the current unit price, assuming a stable price. In contrast, the same income from Vanguard S&P 500 ETF (VOO) necessitates a much larger investment of around $417,690 due to its lower yield.
