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Why Units of NextEra Energy Partners Rallied Nearly 25% in April

By Matthew DiLallo - May 8, 2020 at 1:25PM

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The high-yielding clean energy company bounced back last month.

What happened

Units of NextEra Energy Partners (NEP -0.14%) enjoyed a nice bounce-back in April. After tumbling more than 25% in March amid the coronavirus market swoon, the clean energy company rebounded 24.7% in April, according to data provided by S&P Global Market Intelligence. Powering the company's rally -- aside from an overall bounce in the market -- was its solid first-quarter earnings report

So what

NextEra Energy Partners' operations proved to be immune to the impact the COVID-19 outbreak had on the broader economy. Consequently, the company delivered strong first-quarter results as earnings soared 30% while its cash flow zoomed more than 200%. Powering that growth was the acquisition of a natural gas pipeline system and portfolio of renewable energy assets last year. 

Several wind turbines in a field with a bright sun in the background.

Image source: Getty Images.

Those transactions, when combined with the overall stability of the company's contractually secured clean energy operations, boosted NextEra Energy Partners' confidence in its long-term strategy. The company now believes it can continue growing its dividend at a 12% to 15% annual rate through the end of next year without needing to make any additional acquisitions. Meanwhile, it still estimates that it can maintain that pace through at least 2024 as it completes future transactions. 

Now what

Investors sold stocks blindly in March. Because of that, companies like NextEra Energy Partners tumbled even though the economic shutdown won't affect its cash flow. As investors realized that in April, they started piling back into the company. While it's no longer quite the bargain it had been, NextEra Energy Partners still offers income-seeking investors a compelling 4.4%-yielding dividend that it expects to grow at a fast pace over the next few years.

Matthew DiLallo owns shares of NextEra Energy Partners. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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