Want $1,000 in Dividend Income? Here's How Much You Have to Invest in Energy Transfer Stock.

With its 7.9% yield, Energy Transfer (NYSE: ET) is one of the highest-yielding large-cap oil and gas dividend stocks. The company is also among the largest midstream energy players in the U.S., storing and transporting natural gas, crude oil, natural gas liquids, and refined products to utilities, industrial, and other end users through its extensive pipeline system.

Energy Transfer can pay steady dividends as it earns nearly 90% of its income from fee-based contracts. It is also a master limited partnership (MLP) and, therefore, pays out a significant portion of its cash flow in dividends (or distribution, as it's called in MLP parlance). That makes Energy Transfer a lucrative dividend stock to own, and it can earn you $1,000 annually in dividend income. Here's how.

Energy Transfer just raised its quarterly dividend to $0.32 per share, which equates to an annualized dividend of $1.28 a share. So, buying around 782 shares, or investing roughly $12,710 in Energy Transfer stock at its current price of around $16.25 apiece, can fetch you $1,000 in yearly dividend income.

The investment could be worth it. Energy Transfer cut its distribution in 2020 because of a high debt load but has significantly improved its financials since, has increased its dividend every quarter since 2022, and is committed to dividend growth.

A compelling mix of growth and a high yield

Energy Transfer is aggressively investing in growth, both organically and inorganically. After making several meaningful acquisitions in the past couple of years or so, Energy Transfer is all set to acquire WTG Midstream in a $3.3 billion deal in the coming weeks to expand its footprint in the Permian Basin.

In the long term, Energy Transfer expects to invest up to 40% of its distributable cash flow (DCF) into growth and distribute a little over 50% of its DCF in dividends to shareholders. With the company also targeting an annual dividend increase of 3% to 5%, Energy Transfer makes for a compelling high-yield stock for income investors.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .