NextEra Energy Partners (NYSE: NEP) recently experienced a substantial drop in the value of its shares, with a staggering 29.3% decrease, as reported by InvestingPro data. This comes on the heels of a 35% decline the previous week, driven by a revision in the company’s dividend growth projections. The alteration was prompted by the surge in 10-year Treasury bond yields to 4.8%, compelling NEP to adjust its dividend growth outlook from a range of 12-15% to 5-8%.
This sharp decline in share prices has resulted in the cancellation of a “drop-down” project sale and a series of further analyst downgrades. Notably, Wells Fargo revised its price target for NEP from $80 to $33, reflecting the market’s growing apprehension about the company’s future prospects.
In an effort to navigate the challenging financial landscape, NEP utilized its revolving credit line to acquire a stake in South Texas Midstream, a company it co-owns. However, this strategic move has raised concerns among investors. According to InvestingPro Tips, the company has been rapidly depleting its cash reserves, contributing to investor unease.
As a consequence of these developments, NEP’s dividend yield has surged to an astonishing 15.7%. The stock, which has seen a nearly 70% decline year-to-date, is now trading at just over half its book value. Remarkably, the company’s dividend yield has grown by 16.59% in the last twelve months, according to InvestingPro Data.
In light of the challenges facing the yieldco model, NEP’s management is reportedly exploring alternative strategies to stabilize its position and reassure investors amidst the turbulent market conditions. One potential avenue involves leveraging NEP’s low Price / Book multiple, as indicated by InvestingPro Tips.
Despite the recent downturn, it’s worth highlighting that NEP has a history of raising its dividend for nine consecutive years, as noted by InvestingPro Tips. This could be seen as a testament to the company’s commitment to delivering returns to its shareholders, even in challenging economic times.
For further insights and analysis, investors are encouraged to explore InvestingPro, a platform offering a wealth of real-time metrics and tips for companies like NEP. With InvestingPro, investors gain access to comprehensive information to aid in making informed decisions. To learn more, please visit InvestingPro Pricing.
