If you are looking to add some yield to your portfolio, Energy Transfer's (NYSE:ET) 6.3% distribution yield will likely be attractive to you. The one caveat is that it operates in the energy sector, and the last time the sector was in a downturn, Energy Transfer cut its distribution in half. Can this high-yield master limited partnership's (MLP) distribution survive the next energy downturn?

What goes up must come down

The energy sector has been upended by the geopolitical conflict in the Middle East. With reduced supply, commodity prices have risen. In fact, some of the world's largest energy companies have warned that oil and natural gas prices don't fully reflect the situation. In other words, companies like ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) think oil prices could rise even further.

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This situation is headline-grabbing news, but if you look at the long-term, volatility in the energy sector is actually pretty normal. If you are investing in the energy sector for yield, you want to make sure the business you buy can support its dividend through the entire cycle, including the inevitable energy sector downturns. At first blush, Energy Transfer fails that test because it cut its distribution in half in 2020, during the energy downturn that occurred alongside the coronavirus pandemic.

That, however, was a strategic decision that may actually give the midstream MLP the wherewithal to support its distribution through the next weak patch. Notably, Energy Transfer used the distribution cut to focus on strengthening its balance sheet. Debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) has gone from a peak of 5.4x at the end of 2020 to 4.1x today.

To be fair, peer Enterprise Products Partners' (NYSE:EPD) debt-to-EBITDA ratio went from 4.1x to 3.3x over the same span, so Energy Transfer is still more leveraged than some of its competitors. However, the longer-term trend is clear: Energy Transfer is focused on becoming a more financially sound and reliable business.

ET Financial Debt to EBITDA (TTM) data by YCharts

Energy Transfer's new goal is slow and steady growth

With the balance sheet in better shape, Energy Transfer's current target is for distribution growth of 3% to 5% a year. That's completely reasonable and is roughly in line with what investors have seen from Enterprise Products Partners, which offers a slightly lower 5.7% yield. Enterprise, however, has a long history of increasing its distribution annually, with a streak that runs 28 years. That's roughly as long as Enterprise has been publicly traded.