Investing in the stock market is an excellent way to build wealth. However, it requires effort and the ability to identify quality companies that offer attractive returns. One company that stands out is NextEra Energy Partners (NEP -0.89%).
The sustainable energy company offers a compelling dividend for income investors, with a yield north of 5%. The company has grown steadily, expanding its renewable energy investments and delivering for investors. Here's how much a $10,000 investment in NextEra Energy Partners in 2014 would be worth today.
NextEra Energy Partners is a renewable energy company with stable cash flows
NextEra Energy Partners is a partnership that acquires and manages clean energy projects. Its portfolio includes renewable energy assets, such as wind, solar, and energy storage, and natural gas pipelines.
The company looks to capitalize on trends pushing toward renewable energy sources as countries and corporations look to achieve their carbon emissions reduction goals. Its focus on projects with long-term contracts provides it with consistent, stable cash flows, making it an excellent dividend stock for investors.
At the end of 2022, the company owned interests in a portfolio of renewable energy projects, primarily solar and wind, across 30 U.S. states. It also owns interests in natural gas pipeline assets, although it has plans to sell these assets to become a pure-play renewable energy company in the coming year.
If you invested $10,000 in 2014, you'd have this much today
NextEra Energy Partners has delivered for investors, but what does that mean for your total returns? If you invested $10,000 in the stock in 2014 and reinvested your dividends, your investment would be worth $27,680 today. To put this into perspective, a similar amount invested in the SPDR S&P 500 ETF would be worth around $25,740 today.
NEP Total Return Level data by YCharts
Looking forward at its plans to be a 100% pure-play, renewable energy company
NextEra Energy Partners has been a solid investment since it went public in 2014, but what does the future have in store for it?
It currently owns seven natural gas pipeline assets, but some investors expressed concerns that these pipelines dilute its clean, renewable energy portfolio. In response, the company revealed a long-term plan to become a pure-play renewable energy company by eliminating these natural gas assets to simplify and recapitalize the business.
It is currently in the process of selling its STX Midstream and Meade natural gas pipeline assets in 2023 and 2025 and will use these sales to buy out convertible equity portfolio financings. What this means for investors is that it won't have to issue any equity in connection with the convertible equity portfolio financings through 2025 -- meaning shareholders won't get diluted as a result.
The company believes now is an excellent opportunity to sell its pipeline assets because of the contracts and the markets they serve, which have also received interest from outside buyers. It also sees this as an opportunity to attract a new class of investors looking to participate in the transition to sustainable energy as it strives to achieve zero carbon emissions by 2025.
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A solid dividend stock for investors
NextEra Energy Partners has delivered for investors since going public in 2014, and it looks like it's poised to continue doing so. The company's transition toward a 100% renewable business makes it an appealing way to invest in these growing trends.
With the company positioned to capitalize on green energy, it expects to grow its dividend by 12% to 15% annually through 2026 -- suggesting this a solid stock that can be a steady source of income for your portfolio.
