Energy Transfer LP (NYSE: ET) kicked off 2026 with an ambitious message to investors: the natural gas infrastructure buildout is just getting started. In its 2026 outlook released Monday, the pipeline giant outlined plans to invest between $5 billion and $5.5 billion in growth capital expenditures, primarily targeting natural gas transportation and processing infrastructure that serves America's rapidly expanding energy needs.

The Numbers Behind the Plan

Energy Transfer expects to generate between $17.3 billion and $17.7 billion in consolidated adjusted EBITDA for 2026, representing continued growth from 2025's strong performance. The company's growth capital will flow primarily into projects backed by long-term commitments and targeting mid-teens returns—attractive economics in an industry where capital discipline has become paramount.

Major projects ramping up or coming online in 2026 include:

  • NGL Expansions: Nederland Flexport and Lone Star Express capacity additions
  • Permian Basin Processing: New Mustang Draw processing plants
  • Hugh Brinson Pipeline: Phase I completion
  • Data Center Pipelines: Natural gas infrastructure serving Texas data centers

That last bullet point deserves particular attention. As artificial intelligence workloads explode, data centers are consuming unprecedented amounts of electricity. Many of these facilities are turning to natural gas-fired power generation, creating a direct link between the AI boom and Energy Transfer's core business.

"Energy Transfer is uniquely positioned to capture numerous opportunities in the current market given its nationwide natural gas gathering and transportation franchise and strong financial position."

— Energy Transfer 2026 Outlook

The Natural Gas Tailwinds

Energy Transfer's optimism is grounded in favorable industry dynamics. The United States became the world's largest LNG exporter in 2025, shipping 111 million metric tons of liquefied natural gas—a milestone that reflects both domestic production growth and strong international demand.

Approximately 40% of Energy Transfer's adjusted EBITDA comes from natural gas-related assets. Crucially, the vast majority of the company's segment margins are fee-based, meaning revenue is tied to contracted services rather than volatile commodity prices. This provides earnings stability even when natural gas prices fluctuate.

The company's 140,000-mile pipeline network positions it to capture growth across the natural gas value chain:

  • Gathering: Collecting natural gas from production fields
  • Processing: Separating natural gas liquids from the gas stream
  • Transportation: Moving processed gas to end markets
  • Export: Feeding LNG terminals and international markets

The Distribution Story

For income-focused investors, Energy Transfer offers one of the energy sector's more attractive distribution profiles. The company has returned more than 50% of its annual cash flow to unitholders through cash distributions over the past three years.

Management targets a long-term annual distribution growth rate of 3% to 5%, supported by the predictable cash flows from fee-based contracts. At current prices, Energy Transfer units yield approximately 7%, significantly above the S&P 500's average dividend yield of around 1.5%.

The recent increase in cash distribution represents a positive signal of management's confidence in the company's financial position. For MLP investors who prioritize current income, Energy Transfer remains a core holding in many portfolios.

The Bull and Bear Cases

Bulls argue that Energy Transfer is ideally positioned for the energy transition's middle phase. While renewable energy grows rapidly, natural gas serves as the bridge fuel that provides reliable baseload power and backs up intermittent solar and wind generation. Every data center that comes online, every LNG export terminal that reaches final investment decision, and every manufacturing reshoring project creates potential demand for Energy Transfer's infrastructure.

The bear case centers on longer-term energy transition risks. If renewable energy and battery storage costs continue declining, natural gas demand could peak sooner than expected. Additionally, Energy Transfer's leverage, while manageable, limits flexibility compared to less indebted peers.

Some analysts also point to execution risk. The company's $5 billion capital program requires bringing multiple complex projects online simultaneously. Construction delays, regulatory challenges, or cost overruns could pressure returns.

M&A on the Horizon?

Energy Transfer has been relatively quiet on the acquisition front recently, but analysts expect that to change in 2026. The company has historically grown through strategic acquisitions, and the current market presents attractive opportunities as smaller midstream operators seek exits.

Industry observers predict Energy Transfer will make at least one multi-billion-dollar deal this year, potentially in the Permian Basin where the company is expanding its presence. Any acquisition would likely focus on assets that complement existing infrastructure and can be integrated quickly.

Investment Takeaway

Energy Transfer's 2026 outlook reinforces its position as a natural gas infrastructure play for investors who believe the commodity will remain essential for decades. The combination of growth capital deployment, fee-based earnings stability, and attractive distribution yield creates a differentiated investment profile in the energy sector.

Units closed at $16.59 on the first trading day of 2026, up 0.6%. While the stock underperformed the broader market in 2025, falling more than 15%, analysts see 2026 as a potential inflection point as new projects begin contributing to cash flow.