Key Takeaways
- Energy Transfer yields 6.8% and Altria Group yields 6.2%, and both raised their payouts in fiscal 2025.
- Altria paid out 78% of its free cash flow over the last twelve months, and Energy Transfer’s distributable cash flow covered its distribution 1.8x in fiscal 2025.
- Energy Transfer’s second-quarter adjusted EBITDA grew 31%, but its net debt is 4.0x EBITDA, against 1.4x at Altria.
- Energy Transfer plans $5.6 billion to $5.9 billion of growth capital in 2026, which will test its 4x to 4.5x leverage target.
Anyone hunting for income above 6% will run into Energy Transfer (ET) sooner or later.
On Aug. 4, the pipeline giant raised its 2026 adjusted EBITDA guidance to $18.8 billion to $19.1 billion. It also set its quarterly distribution at $0.34 a unit, which it called “the Partnership’s nineteenth consecutive increase to its quarterly cash distribution.”
Altria Group (MO), the other big name in high yield, had a quieter update: on July 30, it narrowed its 2026 adjusted EPS guidance to $5.61 to $5.72.
So which is the better high-yield dividend stock?
| Metric | Altria Group (MO) | Energy Transfer (ET) |
|---|---|---|
| Dividend yield | 6.2% | 6.8% |
| Annual dividend | $4.44 a share | $1.36 a unit |
| Dividend growth, fiscal 2020 to 2025 | 4.1% a year | 7.8% a year |
| Dividend growth, fiscal 2015 to 2025 | 6.3% a year | 2.2% a year |
| Coverage, on each one’s own measure | Cash dividend payout ratio: 78% (TTM to June 30, 2026) | Distributable cash flow coverage: 1.78x (fiscal 2025) |
| Net debt / EBITDA (LTM) | 1.41x | 3.98x |
| Interest coverage (LTM) | 13.3x | 3.0x |
Altria’s cash is steady, and mostly spoken for
Altria is growing slowly: revenue net of excise taxes rose 1.2% to $5.36 billion in the second quarter of 2026 from a year earlier.
Nicotine pouches are growing as on! PLUS expands nationally, while management puts falling cigarette shipments down to the industry’s long decline, squeezed consumer budgets and smokers moving to e-vapor products.
The cash behind the dividend has held up, though. Free cash flow was $9.07 billion in fiscal 2025, against $6.96 billion of dividends paid. Altria has paid out between 75% and 82% of its free cash flow every year from fiscal 2021 to fiscal 2025.
…and 78% over the twelve months to June 30, 2026. That’s a high payout ratio, but a consistent one.
The risk is that cigarette volumes fall faster, and a 78% payout leaves limited room to absorb that.
Energy Transfer is setting records
Energy Transfer’s business is moving a lot faster. Adjusted EBITDA was $5.07 billion in the second quarter of 2026, up 31% from $3.87 billion a year earlier. NGL transportation, exports and crude volumes all set records, on demand from power plants, LNG exports and data centers.
As an MLP, it pays distributions on units, with a K-1 at tax time, and it’s judged on distributable cash flow, which leaves out its growth projects.
Distributable cash flow per unit was $2.38 in fiscal 2025, a well-covered 1.78x the $1.34 it paid out, down from 2.40x in fiscal 2022. Over that time the distribution climbed from $1.00 to $1.34 a unit, while cash flow per unit went from $2.40 to $2.38.
The chart also shows the cut: the distribution fell from $1.22 a unit in fiscal 2019 to $0.63 in fiscal 2021. That’s why its 10-year growth rate is just 2.2% a year.
Management’s target matches the recent pace. CEO Thomas Long said on the second-quarter call that it’s “targeting a long-term annual distribution growth rate of 3% to 5% and maintaining our leverage targets of 4 to 4.5x EBITDA.” The fiscal 2025 raise was 4.7%.
So which dividend wins?
Energy Transfer is the better high-yield dividend stock. It pays more today, its distribution is well covered, and its cash flow is growing faster.
At each company’s fiscal 2025 raise (4.7% for Energy Transfer and 4.0% for Altria), $10,000 invested today would pay about $1,027 a year from Energy Transfer in year 10, against about $882 from Altria. Altria’s Aug. 27 raise, its 61st in 57 years, was also 4.7%, but even at that pace its smaller check never catches up.
The catch is debt. Energy Transfer’s net debt has run between 3.9x and 4.5x EBITDA since fiscal 2021, ending fiscal 2025 at 4.5x, the top of its own target range.
It has since eased to 3.98x over the last twelve months. That’s still far above Altria’s 1.41x, and Energy Transfer’s EBIT covers its interest 3.0x, against 13.3x at Altria.
Altria’s balance sheet is far stronger, and its payout has stayed in a tight range for five years. Its dividend per share also rose every fiscal year from 2015 to 2025, for growth of 6.3% a year, through the stretch when Energy Transfer cut. It’s just that Energy Transfer pays a bigger check, from faster-growing cash flow that covers it comfortably today.
Of course, Energy Transfer plans to invest $5.6 billion to $5.9 billion in growth capital this year, and management expects $5 billion or more a year through 2029. On Oct. 6, it agreed to buy Vaquero Midstream for about $2.625 billion, $1.95 billion of it in cash. If that spending pushes leverage back above its target, that answer could change.
So what is Energy Transfer stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
