Investors would do well to focus on investment idea that currently trade below our value-based buy targets; here's a look at one such buy-rated stock from our model portfolio, suggests Roger Conrad, editor of Conrad’s Utility Investor.

NextEra Energy Partners LP (NEP) is a member of two clubs that have grown unpopular with investors. The first is names that are involved with renewable energy.

The second is dividend payers that rely on issuing equity and debt to finance the purchase of cash-generating assets from their parent—in this case, NextEra Energy (NEE).

Despite the president-elect’s rhetoric on the campaign trail, fears that Trump will stifle renewable-energy development appear overblown.

Although the incoming administration’s policies could hurt smaller companies that depend on tax credits and research grants, NextEra Energy Partners’ cash flow comes from gas pipelines and renewable-energy capacity that operate under truly long-term contracts.

At this stage in its life-cycle, the yieldco’s growth prospects hinge primarily on the drop-down of NextEra Energy’s existing pipeline and contract generation assets as well as the sponsor’s backlog of projects.

Even if you exclude under-construction assets, NextEra Energy has a huge inventory that could make its way to the yieldco.

The utility recently announced the start-up of a 250-megawatt solar-power installation in Nevada that it developed with First Solar (FSLR). This facility operates under a 20-year contract and will sell all its output to the California utility unit of Edison International (EIX).

NextEra Energy Partners can’t control investors’ aversion to drop-down stories. On the other hand, the sponsor has sought to limit the amount of equity that NextEra Energy Partners issues on the public market by participating in some offerings.

The yieldco’s dividend has also increased by 26.4 percent from year-ago levels. NextEra Energy Partners looks like a good buy for aggressive investors who don’t own the stock already.

Note that NextEra Energy Partners isn’t an MLP and that the company has elected to be treated as a corporation for US tax purposes; investors will receive the familiar 1099 instead of a K-1 at tax time.

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