NEP - Where Will Ultra-High-Yield NextEra Energy Partners Stock Be in 5 Years?
2024-07-14 06:05:00 ET
Who wouldn't want to own an investment with a more than 13% yield that was also in a position to increase its disbursements by 6% a year? I'd think every income investor would consider backing up the truck to load up on such an asset. Given that the average annual return on the stock is around 10%, even growth investors would have to consider buying in.
Those levels of return are what NextEra Energy Partners (NYSE: NEP) is currently offering investors. But don't get too excited. There's trouble in this ultra-high-yield paradise.
If you look at NextEra Energy Partners in isolation, you'll miss the most important piece of the master limited partnership's (MLP) story. That's because it serves a very specific purpose for its parent, utility giant NextEra Energy (NYSE: NEE) . NextEra Energy basically created NextEra Energy Partners for the sole purpose of having an MLP buyer for its renewable power assets. In the industry, these sales are called "drop downs."
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Where Will Ultra-High-Yield NextEra Energy Partners Stock Be in 5 Years?