Key Takeaways
- Verizon yields 6.8% and Energy Transfer 6.7% at their current payout rates, so the two pay nearly the same check today.
- Verizon’s dividend used 54% of its free cash flow over the twelve months to June 30, 2026, and the company counts 20 straight years of raises.
- Energy Transfer covered its distribution 1.78x with distributable cash flow in fiscal 2025 and raised its payout per unit 4.7% that year, against 1.5% for Verizon.
- Energy Transfer’s distribution fell from $1.22 a unit in fiscal 2019 to $0.63 in fiscal 2021, and its net debt is 3.98x EBITDA, against 3.35x for Verizon.
Energy Transfer (ET) is having a strong 2026: its second-quarter distributable cash flow came to $2.59 billion, up from $1.96 billion a year earlier, and in August it raised its full-year adjusted EBITDA guidance to $18.8 billion to $19.1 billion.
Verizon (VZ) had good news of its own in July: it guided to 9% to 10% free cash flow growth for the year.
At their current payouts, both yield 6.7% or more. So which is the better high-yield dividend stock?
| Metric | Verizon (VZ) | Energy Transfer (ET) |
|---|---|---|
| Yield at the current rate | 6.8% | 6.7% |
| Dividend growth | 1.9% a year, fiscal 2020–2025; 1.5% in fiscal 2025 | 7.8% a year, fiscal 2020–2025; 4.7% in fiscal 2025 |
| Record (company’s own count) | 20 straight years of raises | 19 straight quarterly increases |
| Coverage, last reported | Cash dividend payout ratio: 54% (TTM to June 30, 2026) | Distributable cash flow coverage: 1.78x (fiscal 2025) |
| Coverage, forward (fiscal 2026 consensus) | Cash dividend payout ratio: 54% | Distributable cash flow coverage: 2.13x |
| Net debt / EBITDA (LTM) | 3.35x | 3.98x |
| Interest coverage, EBIT / interest (LTM) | 4.36x | 3.01x |
Verizon’s raises are slow, but the cash is there
The dividend used a well-covered 54% of free cash flow over the twelve months to June 30, 2026, and fiscal 2026 consensus also puts it at 54%. Free cash flow has covered dividends paid in every fiscal year since 2018, and the dividend used 57.0% of it in fiscal 2025.
The catch is the pace: dividends per share grew 1.9% a year from fiscal 2020 to fiscal 2025, from $2.48 to $2.73, and 1.5% in fiscal 2025 alone. On its first-quarter call, Verizon said: “This marks the 20th consecutive year of dividend increases, a track record we’re extremely proud of.”
The main risk is debt: net debt is 3.35x EBITDA.
The newest is competition. SpaceX agreed on Oct. 8 to buy nationwide low-band spectrum for its Starlink phone service, and Verizon’s stock fell 8.7% the next day. The deal still needs the FCC’s approval, and Verizon says spectrum alone “does not provide the network or infrastructure to offer true nationwide coverage.”
Energy Transfer raises faster, with a cut in its past
Energy Transfer’s yield is about the same as Verizon’s, but its business is growing much faster: adjusted EBITDA was $5.07 billion in the second quarter of 2026, up from $3.87 billion a year earlier. That’s a 31% rise, against 7.2% for Verizon. After the guidance raise, analysts expect distributable cash flow per unit to jump 23%, from $2.38 in fiscal 2025 to $2.92 in fiscal 2026. (Last year’s consensus came within 2% of the actual figure.)
As a pipeline, it’s judged on distributable cash flow coverage: 1.78x in fiscal 2025 and 2.13x on fiscal 2026 consensus. From fiscal 2022 to fiscal 2025, distributable cash flow per unit stayed flat, at $2.40 and then $2.38. Over the same years, distributions rose from $1.00 to $1.34 a unit, so coverage narrowed from 2.40x to 1.78x.
The same chart shows the cut: distributions fell from $1.22 a unit in fiscal 2019 to $0.63 in fiscal 2021, even though distributable cash flow covered fiscal 2020’s payout 2.32x. So the 7.8% five-year rate starts from the cut. The pace now is 4.7%, from fiscal 2025, inside the target CEO Thomas Long restated on the second-quarter call: “a long-term annual distribution growth rate of 3% to 5%.”
The risk is debt: net debt is 3.98x EBITDA and EBIT covers interest 3.01x, both weaker than Verizon’s, and the company plans $5.6 billion to $5.9 billion of growth capital this year. On Oct. 6, it also agreed to buy Vaquero Midstream for about $2.6 billion in cash and units, a deal it expects to add to distributable cash flow per unit right away. As an MLP, Energy Transfer pays distributions on units, with a K-1 at tax time.
So which dividend wins?
Energy Transfer is the better high-yield dividend stock. The two checks start nearly even, at 6.7% against 6.8% for Verizon, so growth decides it. At its 4.7% pace, more than three times Verizon’s 1.5%, its income passes Verizon’s almost right away. And its coverage leaves room for more raises.
Verizon still makes a strong case. Its 20 straight years of raises are a record management clearly means to keep. Its dividend is well covered, its balance sheet is lighter, and there’s no K-1. It’s just that, with yields this close, I’d rather own the payout that’s growing faster, from a business that’s growing faster too.
Of course, that 2.13x relies on a 23% jump in distributable cash flow per unit this year. Its third-quarter results will show whether that jump is on track.
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!
