Takeaways
- NextEra Energy subsidiary NextEra Energy Partners, LP, cut its distribution growth outlook in half.
- The company said the move was necessary because of the Fed's tightening monetary policy and from rising interest rates.
- NextEra Energy Partners expects to maintain its low distribution growth rate until at least 2026.
NextEra Energy (NEE) was the worst-performing stock in the S&P 500 on Wednesday, as its shares fell more than 8% after the renewable energy provider's subsidiary, NextEra Energy Partners, LP (NEP) , has significantly reduced its retail growth outlook, accusing The Federal Reserve is taking steps to combat inflation. Shares of NextEra Energy Partners plunged 20%.
NextEra Energy Partners said it was reducing its per-unit distribution growth rate by 5% to 8% through at least 2026, with a target rate of 6%. That would be half of what the company had previously planned.
John Ketchum, CEO of both companies, noted that “tighter monetary policy and higher interest rates obviously affect the financing need to increase distributions by 12%.” He added that trying to maintain the 12% threshold “impacted NextEra Energy Partners' unit price and performance.”
Ketchum argued that ;By reducing growth expectations, the company will be able to focus on higher yielding growth opportunities and reduce new capital requirements.
Shares of NextEra Energy and NextEar Energy Partners fell to its lowest level in more than three years following the news.
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Source: investopedia.com