Why NextEra Energy Partners Stock Is Ripping Higher Today
Shares of NextEra Energy Partners (NYSE: NEP) clocked their biggest daily gain for the year today, surging 11.6% in early-morning trade. The renewable energy stock, which caught investors on the wrong foot some months ago by slashing its dividend growth target, just reaffirmed its new dividend growth goal backed by strong numbers for its fourth quarter of 2023.
NextEra Energy Partners' Q4 revenue of $232 million and earnings of $1.20 per share missed analysts' estimates. The company also reported a sharp drop, or nearly 58%, in its net income for the full year. A deeper dive into the numbers reveals NextEra Energy Partners' biggest chink in the armor, one that also forced the company to slash its dividend growth target last year -- high interest rates. NextEra Energy Partners' interest expense surged last year, eating into its bottom line.
Management, however, remains focused on NextEra Energy Partners' transition plan, which piqued the market's interest today. The company sold part of its natural gas pipeline portfolio last month, the proceeds from which will help it buy out its convertible equity portfolio financings. Rising interest rates and a falling stock price last year made those buyouts and growth investments costly for the company, which is why management cut NextEra Energy Partners' annual dividend growth target through 2026 from 12% to 15% to only 5% to 8%, with an annual target of 6%.
Source Fool.com
