Bank of America expects interest rates to stay high throughout 2025 due to stubborn inflation and a strong job market, making dividend-paying stocks more important than ever. These stocks don’t just help protect against inflation — they also provide steady, reliable returns, which is crucial in today’s uncertain economy.
This is where Energy Transfer (ET) stands out. Thanks to its strong fundamentals and promising outlook, Bank of America recently named it one of the top dividend stocks to watch for Q2 2025. With a forward dividend yield of 8%, ET significantly outpaces the industry average, making it an attractive option for income-focused investors.
Energy Transfer has also built a solid reputation for strategic growth and consistent financial performance. The company operates one of the largest energy networks in the U.S., with over 130,000 miles of pipelines handling natural gas (NGK25), crude oil (CBM25), and other energy products. This extensive infrastructure supports its ability to generate stable cash flows and maintain its high dividend payouts.
So, what makes ET stand out among Bank of America’s picks? Let’s dive in.
Examining ET’s Financial Strength
Energy Transfer (ET) is a leading energy infrastructure company specializing in the transportation and storage of natural gas, crude oil, and natural gas liquids (NGLs). With its strong financial foundation and consistent operational growth, ET has earned recognition from Bank of America as a top dividend stock for Q2 2025.
Its forward dividend yield stands at an impressive 8%, supported by an annual payout of $1.30 per share.
Valuation metrics also affirm ET’s attractiveness, with a trailing price-earnings ratio of 14.8x and a forward P/E ratio of 13.5x — favorable when compared to its peers.
However, the stock has not been immune from the broader selloff this year. Shares are down 17% so far in 2025.
On Feb. 11, ET reported robust financial results for the quarter and year that ended Dec. 31, 2024. Net income came in at $1.08 billion, equivalent to $0.29 per common unit.
Adjusted EBITDA rose by 8% year-over-year to $3.88 billion. Distributable cash flow attributable to partners totaled $1.98 billion, up from $1.93 billion in the prior year.
Operationally, ET continues to expand its footprint. Crude oil transportation volumes surged by 15% in Q4 2024, while NGL transportation volumes increased by 5%. The company also completed key projects such as the Sabina 2 pipeline conversion and Grey Wolf processing plant optimization, enhancing capacity and efficiency across its network.
Growth Catalysts Driving Long-Term Value
One of Energy Transfer LP’s most promising growth catalysts is its recent long-term agreement with CloudBurst Data Centers to supply natural gas to an AI-focused facility in Central Texas. Under the deal, ET will deliver up to 450,000 MMBtu of natural gas daily via the Oasis Pipeline, supporting 1.2 gigawatts of power generation for at least 10 years.
This marks ET’s first direct commercial arrangement with a data center, signaling a strategic expansion into high-growth markets like AI infrastructure. With operations expected to commence in Q3 2026, this partnership positions ET to tap into the rising energy demands of the tech sector.
In parallel, Energy Transfer has strengthened its financial flexibility by pricing $3 billion in senior notes across three tranches with maturities extending from 2030 to 2055. The proceeds are earmarked for refinancing existing debt, which could lower interest expenses and enhance financial stability.
By optimizing its capital structure while maintaining liquidity for future growth initiatives, ET is demonstrating a proactive approach to balancing near-term obligations with long-term opportunities — a critical factor for sustainable growth.
Adding to its momentum is a significant legal victory in the Dakota Access Pipeline case. In March 2025, a federal jury awarded Energy Transfer over $600 million in damages from Greenpeace International and affiliated groups for their role in protests against the pipeline’s construction.
This ruling not only offsets prior litigation-related liabilities, but also sets a precedent that could deter future activist campaigns targeting energy infrastructure. The decision reduces operational risks and strengthens ET's position for future projects, further reassuring investors. Notably, shares of ET saw an uptick following the verdict, reflecting increased market confidence.
Analyst Insight on Energy Transfer
Energy Transfer has captured the attention of analysts and investors alike, with 14 surveyed analysts giving it a consensus “Strong Buy” rating. This resounding vote of confidence is further supported by an average price target of $23.53, which implies impressive upside of approximately 43% from its current price.
Bank of America’s endorsement of Energy Transfer as a top dividend stock for Q2 2025 underscores the growing confidence among analysts in the company’s ability to deliver consistent returns. Jean Ann Salisbury, a Bank of America Securities analyst, reaffirmed a “Buy” rating on ET, citing its robust financials, strategic growth initiatives, and attractive valuation metrics. Salisbury set a price target of $23.
The company’s outlook for 2025 provides a solid foundation for this bullish sentiment. Energy Transfer projects its adjusted EBITDA to range between $16.1 billion and $16.5 billion, reflecting its capacity to sustain growth in a competitive energy landscape. Additionally, the company plans to invest approximately $5 billion in growth capital expenditures and allocate $1.1 billion for maintenance capital expenditures.
This balanced approach demonstrates Energy Transfer’s commitment to expanding its operations while maintaining the reliability and efficiency of its existing infrastructure — a critical factor for long-term success.
Conclusion
Energy Transfer checks all the right boxes as a top dividend stock for Q2 — strong financials, strategic growth initiatives, and unwavering analyst confidence. With a forward dividend yield of 8% and an average price target implying more than 40% upside, it’s clear why Bank of America sees ET as a standout pick.
Given its robust 2025 outlook and expanding market presence, shares are likely to trend upward, especially as key catalysts like the CloudBurst deal unfold. For income-focused investors, ET looks like a solid bet.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
