Units of Energy Transfer (ET 0.26%) surged 42% in 2024, according to data provided by S&P Global Market Intelligence. That crushed the S&P 500, which delivered a robust 23% return last year. Add in its lucrative cash distributions (and assume reinvestment), and Energy Transfer's total return was almost 54%, further widening its lead over the S&P 500 last year (25% total return).

Here's a look at what fueled the master limited partnership's (MLP) strong showing in 2024 and whether it can deliver another market-beating performance in 2025.

An acquisition-fueled boost

Energy Transfer entered 2024 with a lot of momentum. The pipeline company closed two acquisitions in 2023 (Lotus Midstream and Crestwood Equity Partners), which contributed to its growth last year. The midstream giant also benefited from organic expansion projects and strong market conditions.

Those growth drivers helped fuel record volumes across several areas during the third quarter. They also had Energy Transfer on track to deliver 12% earnings growth at the midpoint of its guidance range. That growth enabled the MLP to steadily increase its distribution (3.2% year-over-year growth in the third quarter).

Energy Transfer continued its shopping spree last year. It acquired WTG Midstream in July. The MLP expects that highly accretive deal to increase its distributable cash flow by $0.04 per unit this year, increasing to $0.07 by 2027.

The MLP also secured several new organic expansion projects in 2024. The biggest was the $2.7 billion Hugh Brinson Pipeline, which will provide additional gas takeaway capacity in the Permian Basin when it comes online at the end of 2026.

The company expects to continue securing new expansion projects. It secured Chevron as a customer for its proposed Lake Charles LNG project, putting that long-delayed export terminal another step closer to becoming a reality. Meanwhile, artificial intelligence (AI) data centers are emerging as a potentially robust growth catalyst for the MLP to expand its natural gas pipeline network to help support the expected surge in electricity demand from those facilities in the coming years.

Everything's in place for another strong year in 2025

Energy Transfer enters 2025 with a lot of momentum. It will get a notable boost from its highly accretive acquisition of WTG Midstream. The MLP also completed several expansion projects in the second half of last year and has a couple more expected to enter service by the middle of this year, which should supply it with incremental income. On top of that, the MLP has additional upside catalysts, from the potential to approve new expansion projects (like the long-awaited Lake Charles) to the possibility of returning additional cash by launching a unit repurchase program. Add all that to the fact that it still trades at a bottom-of-the-barrel valuation compared to its peers (which is why it yields 6.5% even after last year's rally), and the MLP certainly has enough potential fuel sources to deliver another strong total return in 2025.