NextEra Energy Partners Could Be a Growth Machine

Every yieldco wants to have a low cost of capital it can use to fund projects that drive long-term dividend growth. And if the market has confidence in a yieldco, it can drive a low cost of capital that leads to a perpetual cycle of positive growth for that company.

But the opposite can also be true. If a yieldco's cost of capital rises, it can lead to a death spiral caused by rising interest payments, falling dividends, and eventually a restructuring. That's what happened to TerraForm Power (NASDAQ: TERP) and TerraForm Global (NASDAQ: GLBL) when SunEdison started to collapse.

One yieldco that has gained the market's confidence and should have a lot of growth ahead is NextEra Energy Partners (NYSE: NEP), which has both a low cost of debt and equity, the perfect combination for a yieldco.

Source: Fool.com