Catalyst Watch: This Beaten-Down, High-Yield Dividend Stock Is Working on a Long-Term Solution to Its Biggest Issue
NextEra Energy Partners (NYSE: NEP) delivered supercharged dividend growth for the first several years of its existence. Its dividend has surged nearly 370% since it became public in 2014, growing by a double-digit annual rate until last year. Powering the surging payout was a steady diet of acquisitions largely funded by convertible equity portfolio financing (CEPFs) arranged by several well-known institutional investors.
The company hoped its rising stock price would enable it to fund the buyouts of those CEPFs as they matured. Instead, surging interest rates (and concerns about its CEPF obligations) caused shares to plunge roughly two-thirds from their peak. That has forced NextEra Energy Partners to shift gears so it can fund its upcoming CEPF buyouts while still growing the dividend (albeit at a more moderate mid-single-digit annual pace).
NextEra Energy Partners revealed its strategy to address the nearest-term CEPF maturities last May. It's becoming a pure-play renewable energy company by selling its natural gas pipeline assets in phases. It planned to sell its STX Midstream and Meade natural gas pipeline assets in 2023 and 2025. That would give it the proceeds to fund the buyouts of nearly all of its CEPFs through 2026 (it would have $294 million remaining on one CEPF due that year).
Source Fool.com
