NextEra Energy Partners ( CIP -3.74% ) has been a dividend growth dynamo over the years. The clean energy infrastructure operator has increased its compensation every quarter since its IPO in 2014. In total, it has increased its dividend by more than 290%.
The company plans to continue to rapidly increase its payouts in the years to come. This makes it an excellent stock for investors looking to garner a quick upside. passive income flow.
NextEra Energy Partners recently released its first quarter results. The clean energy company increased its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) by 16% to $412 million despite missing $55 million in revenue from a winter storm last year in Texas. Meanwhile, cash available for distribution (CAFD) fell from $184 million to $169 million. However, this is mainly due to the impact of last year’s storm, which made the comparable period difficult. The company’s EBITDA growth was fueled by the 2.4 gigawatts of renewable energy and storage projects it has added to its portfolio over the past year.
This growing revenue stream has given the company the funds to increase its dividend again. It has increased the payout by 15% over the past year to an annualized rate of $2.93 per share. This pushed its dividend yield to over 4%.
NextEra Energy Partners has also taken steps to enrich its portfolio. The company has agreed to acquire from its sponsor a 67% stake in a 230-megawatt, four-hour battery storage facility in California. NextEra Energy (BORN -2.93% ) for $191 million. The deal will further diversify its portfolio by adding another battery storage project while increasing its earnings and cash flow. He expects the asset to generate $13-18 million in annualized CAFD over the next five years. NextEra expects to fund this acquisition with existing debt capacity and close the deal when the project reaches commercial operations later this year.
Meanwhile, the company sold the Momentum Pipeline for $203 million. It plans to redeploy proceeds from the sale of the Texas Gas Pipeline into higher-yielding renewable energy investments.
Strong growth still to come
NextEra Energy Partners’ solid progress in the first quarter allowed the company to reaffirm its outlook for the full year. The company expects to increase its annualized EBITDA outflow rate from $1.775 billion to $1.975 billion and CAFD from $675 million to $765 million. It also plans to increase its dividend at an annualized rate of $3.17 to $3.25 per share. This would increase the payout by 12% to 15% from its 2021 year-end rate. In the meantime, it expects to achieve this growth while maintaining a dividend distribution rate in the low 80% range.
The company expects to generate this rate of dividend growth until at least 2024. Its outlook hinges on its ability to continue to acquire cash flowing clean energy infrastructure assets. Through its relationship with NextEra Energy, the world leader in wind and solar power generation, it has a vast set of opportunities. NextEra has a large and growing backlog of development projects that it can help fund by selling operating assets to its partnership. During this time, the company may also continue to acquire additional assets from third parties. It has plenty of cash to fund investments. The company can strengthen its financial capacity by recycling capital, such as its recent agreement to sell a gas pipeline to finance new investments in renewable energy.
A Powerful Passive Income Maker
NextEra Energy Partners has an impressive dividend track record, increasing its payout by nearly 300% since 2014. The clean energy company expects to generate more powerful dividend growth over the next few years, fueled by the continued expansion of its portfolio. This makes it an excellent stock for investors looking to collect a fast-growing stream of passive income, especially one powered by renewable energy.
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