Key Points
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Energy Transfer’s “toll road” pipelines are generating stable profits.
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Digital Realty will profit from the secular growth of the cloud and AI markets.
The escalating conflicts across the Middle East, inflation, and murky monetary policies all dragged down U.S. stocks over the past month. However, the S&P 500 is still up 20% over the past 12 months and looks historically expensive at 29 times earnings.
Therefore, investors shouldn’t be surprised if the macro headwinds finally trigger a market crash and cool those valuations to more sustainable levels. If that happens, stable blue chip dividend stocks will draw in more investors as safe-haven investments. Two of those high-yield stocks are worth buying today: Energy Transfer(NYSE: ET) and Digital Realty Trust (NYSE: DLR).
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
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Energy Transfer
Energy Transfer, which operates over 140,000 miles of pipeline across 44 states, is one of the largest midstream companies in America. It charges upstream extraction companies and downstream refining companies to transport natural gas, natural gas liquids (NGLs), crude oil, and other refined products through its pipelines. It also transports natural gas overseas.
That “toll road” business model is well-insulated from volatile commodity prices, since it only needs those resources to keep flowing to generate stable profits. It also operates as a master limited partnership (MLP) that blends a return of capital with its own income to pay tax-efficient distributions.
It currently pays a high forward yield of 7.1%. In 2025, its annualized adjusted DCF of $8.2 billion easily covered its $4.6 billion in distributions.
From 2025 to 2027, analysts expect Energy Transfer’s earnings per unit (EPU) to grow at a 14% CAGR as it expands its infrastructure in the Permian Basin and other resource-rich regions. Its stock looks cheap at 12 times this year’s EPU, so it could be a great place to park your cash and earn some extra income while waiting for the macro environment to stabilize.
Digital Realty
Digital Realty is a data center real estate investment trust (REIT). It operates more than 300 data centers for 5,000 customers, and it already serves over half of the Fortune 500.
Its business model is simple: buy data centers, lease them out, and split the rental income with its investors. Its business is flourishing as more companies upgrade their AI infrastructure to handle the latest cloud and AI applications. As an REIT, it must distribute at least 90% of its pre-tax income as dividends to maintain a lower tax rate, and it pays a forward yield of 2.7%.
For 2026, it expects its core funds from operations (FFO) per share, a key profitability metric for REITs, to rise 8%-10% to $7.90-$8.00. That will easily cover its forward dividend rate of $4.88 per share.
Its stock also looks reasonably valued at 23 times this year’s core FFO per share. Simply put, if you’re looking for a conservative way to profit from the secular expansion of the cloud, AI, and data center markets, Digital Realty checks all the right boxes.
Should you buy stock in Energy Transfer right now?
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Leo Sun has positions in Energy Transfer. The Motley Fool has positions in and recommends Digital Realty Trust. The Motley Fool has a disclosure policy.
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