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dydo

NextEra Energy Partners, LP (NEP)

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Good thought, even better if a bit of pullback continues till record date . Agree its a very interesting stock, thanks for your excellent articles on SA.

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Thank you for your comments Heliostat,

This quarter I certainly like NEP and NYLD. I am cooling to PEGI as their high payout, is concerning somewhat. Still, great dividend, but will not see a lot of growth. Their strategy seems to lack the financial strength to support it, so I am curious how would it be done.

I think one cannot go wrong with NEP and NYLD for next five years. My concern is I do not have enough to park the money for five years to make this meaningful. I believe action could be better in the solar ring, and sooner than the five years I expect NEP to grow to a double.

I can only make a small investment of 15% and will dedicate this portion to yieldco, while the rest will be trying to get the better of the peaks and valleys. I think the choppiness of solar industry can be explored, first test starting next week.

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3 hours ago, odyd said:

I think the choppiness of solar industry can be explored, first test starting next week.

Precisely!  Good luck (to us all)!!

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Hi Robert, Thank you for excellent article re PEGI whitepaper.  Wondering from your research for that article how you see potential returns of NEP VS PEGI  over next 5 years assuming Pattern Dev 2.0 proceeds and no major hickups? You calculate approx $27 for PEGI on 6% return (is this post near term equity raise to finance the 100m?) and can see in your analysis how the 100m into Dev2.0 projects can lead to cash flow for acquisition of the next 2.3GW.  What I'm wondering is what kind of 2020 SP  valuation  this might imply for PEGI?  Beyond 2020  does this Dev2.0 investment then compound or hits a ceiling , limiting growth after that , assuming ppa get less generous etc? This is a long way of saying I am trying to weigh up NEP 2022 SP projection you have made previously vs  2022  PEGI SP potential  if Dev2.0 proceeds sucessfully. I am planning to hold both longterm but can add a bit to either position at this time and working through this decision. Thanks in advance.

Edited by heliostat
punctuation for clarity

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I think the best way to look at it is to assume how many steps PEGI needs to take to reach its goal. Let's take the $100M for example. Nowhere in the paper, the company says that amount would be $100M at 6% yield. They describe market conditions of yieldco having a yield of 6% to buy projects.

I had used this reference as I had none other. If I said that Pattern financing project equity to earn money at two times, would it matter to you they would sell shares now, a 7.7%?

They still need to buy all those projects; they need to build them and now whether they make money (which they may not ) they need sell equity every time. I figured if they sold equity to buy projects at 7.7% yield vs. the amount accretion plus CAFD they cannot pay for the outflow.

NEP will not issue shares until 2018 and still grow dividend 15% in this period; they may issue them at $40, to buy more of 13GW of renewables being built by another company in an internal network supported by utility cash generation of NEE. All to keep growing them all the way to 2022.  PEGI if they raise dividend now, they will be paying it from tax equity payments or that 12% undisclosed in CAFD. Frankly, they have no room for more dividend increases. In this instance they at the dead end. I am interested what happens on May 9th, is is possible they will only raise dividend symbolically? I would not be surprised.

After Q1 balance sheet, they will have a little cash left, and their liquidity will consist of a mostly revolver.  Q2 will be the state as of now, and it will look soft. They need a lot of operational savvy and tone of luck to be successful here. PEGI is a risk and very fragile to avoid it. NEP is not. That is my take on it.

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Thanks Robert very useful thoughts.  I read your comments on NYLD , thinking about NEP comparison, half the price of NEP is attractive but NEE seems a lot stronger parent than NRG . I realise NYLD is advising 16% div growth next two years which ~ matches or slightly better than NEP. How do you see NYLD vs NEP after 2020? NYLD has dropped to $16.75 AH ?entry?

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Thanks Robert very useful thoughts.  I read your comments on NYLD , thinking about NEP comparison, half the price of NEP is attractive but NEE seems a lot stronger parent than NRG . I realise NYLD is advising 16% div growth next two years which ~ matches or slightly better than NEP. How do you see NYLD vs NEP after 2020? NYLD has dropped to $16.75 AH ?entry?

NYLD is not NEP but it is better than PEGI. I see it growing as good but I need to analyze it more.

Sent from my SM-G950W using Tapatalk

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