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Shares of NextEra Energy Partners (NEP -8.79%) fell on Monday, down 8.7% in today’s trading.

The master limited partnership (MLP) focused on buying and holding renewable energy projects from parent utility NextEra Energy (NEE -1.28%) was down after a Wall Street analyst downgraded the stock and lowered his price target.

Why? A potential cut to the company’s 13.8% dividend could be in the cards.

RBC forecasts a dividend cut for NextEra

In his note today, RBC Capital analyst Shelby Tucker lowered his rating on NextEra Partners from outperform to market perform, cutting his price target from $38 to $30.

Tucker now believes that there aren’t enough lower-cost wind repowering opportunities to grow NextEra’s earnings to its 5% to 8% target, and that the company may have trouble keeping the dividend this high while also paying off billions of looming convertible equity portfolio financing (CEPF) maturities. These types of project financings enabled NextEra to fund projects in a relatively low-cost and flexible manner, but NEP’s CEPF notes were sold when interest rates were much lower. After 2026, there are $3.7 billion of looming maturities that will need to be paid off.

While NextEra has time and options to pay off these liabilities, the increased cost of capital since the CEPFs were sold means that it will be expensive for NextEra to refinance. Thus, while management had contemplated private financings, Tucker thinks the lingering higher interest rate environment will necessitate a cut to the company’s distribution. Tucker suspects a 50% cut could be in the cards, and may even be prudent. That would take care of the CEPF financing while leaving the company free from having to take on expensive debt or issue equity. Issuing equity would be painful, with the stock down 68% from its all-time highs.

Be wary of MLPs that pay out high dividends

Investors may have been tempted to buy NextEra in the past due to its ample and growing dividend. But the problem with these MLP models is that when interest rate or economic worries pop up and the stock goes down, the company can no longer issue stock to grow. Thus, the model becomes “stuck” and can result in painful dilution or cuts to what once looked like a mouth-watering dividend yield. It looks like that is what’s happening with NEP today.