Why NextEra Energy Partners Stock Is Sinking Today
Shares of NextEra Energy Partners (NYSE: NEP) tumbled Monday morning and were trading 5.5% lower as of 10:45 a.m. ET. The renewable energy company announced its fourth-quarter earnings on Jan. 25, and while management reiterated its dividend growth goal through 2026, interest rates significantly influence the company's growth. Based on Monday morning's macroeconomic updates, investors in NextEra Energy Partners may have to temper their expectations for now.
NextEra Energy Partners stock lost nearly 57% value in 2023, and the company slashed its dividend growth target through 2026 by nearly half to a range of 5% to 8% per year, with an annualized target of 6%. Management blamed a tighter monetary policy and higher interest rates.
NextEra Energy Partners typically relies on low-cost funding options like convertible equity portfolio financing (CEPF) to fund its growth and dividends. But with interest rates rising last year and its stock price falling simultaneously, it became costlier for the company to buy out CEPFs, making its prior dividend growth target range of 12% to 15% unsustainable.
Source Fool.com
