NextEra Energy Partners $NEP: Renewable Energy MLP Play

MLP investments involve a higher degree of tax reporting relative to common stock investments in a typical C-corporation. Similar to a REIT, a MLP must distribute at least 90% of it's earnings to it's partners. The attractiveness of the ETF product in the MLP space is greatly reduced by the diversification rule limiting the amount of MLP investments to 25% of ETF assets. Therefore, most MLP ETFs are structured as C-corporations and pay corporate tax on dividends before distribution, greatly reducing the return offered by the MLP structure.
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Looking for a MLP focused on renewable energy, and I found an interesting opportunity in NextEra Energy Partners, $NEP, managed by general partner NextEra Energy, $NEE. $NEP owns about 3.3 GW of renewable power producing properties, mostly wind and little solar. $NEP also owns 4 natural gas pipelines. $NEP trades at a yield in the low 4% range which is lower than most MLPs. $NEP does have a robust dropdown pipeline of projects and has guided to increasing the distribution by 12%-15% annually through 2022 off the year end 2016 annualized distribution of $1.41. If you believe management's guidance, the forward distribution and yield table looks like this:

Looking at this table, the current lower-than-MLP-average yield doesn't look so bad. You have to ask yourself how likely management is to achieve their guidance. The high level of dropdown projects makes their guidance look like a good bet. In this light, $NEP looks to me to be a buy.