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NextEra Energy: Illuminating Growth Amidst Market Shadows

NextEra Energy: Illuminating Growth Amidst Market Shadows

In the world of investment, the efficient markets hypothesis is a comforting theory, but seasoned investors know better – markets often operate in mysterious ways. Enter NextEra Energy (NYSE: NEE), a company currently at the center of market scrutiny. As Wall Street voices concerns, NextEra Energy’s management exudes confidence, with a history of success backing their stance. Amidst this backdrop, here are three compelling reasons why aligning with management and buying into NextEra Energy might just shine a light on your portfolio.

1. The Radiant Business Model of NextEra

Approximately 70% of NextEra Energy’s operations resemble those of its regulated utility peers, with Florida Power & Light, a prominent entity in Florida, leading the charge. Florida’s allure, drawing in residents for tax benefits and sunny weather, translates into a growing customer base for the company. Meanwhile, the remaining 30% of NextEra Energy’s business, housed under NextEra Energy Resources, stands out as one of the world’s largest providers of solar and wind power.

Person in a round inner tube in a swimming pool flashing a thumbs-up.

Image source: Getty Images.

While Florida Power & Light represents stable growth, NextEra Energy Resources embodies high-growth potential, boasting a significant clean energy generation capacity set to expand further. Despite a recent dip in share prices, reflecting investor sentiment, the horizon seems bright for NextEra Energy.

2. The Luminescent Yield of NextEra Energy

Considering NextEra Energy’s dividend yield, a simple yet powerful equation comes into play – as the share price falls, the yield rises. Currently yielding around 3.3%, nearing historical highs, the stock may present an enticing proposition for investors seeking value amidst market fluctuations. Rising interest rates, however, have cast a shadow over the utility sector, impacting companies like NextEra Energy.

While a 3.3% yield may not seem astronomical, the combination of yield and dividend growth unveils a deeper tale, leading us to the next reason.

3. The Constant Shine of Dividend Growth

NextEra Energy’s consistent dividend hikes, averaging an impressive 10.9% annually over the past decade, stand out in the utility landscape. Despite near-term uncertainties, the company’s robust business model supports its commitment to sustaining dividend growth. Projections extending through 2026 indicate a 10% dividend growth trajectory, supported by solid earnings expansion targets.

NEE Chart

NEE data by YCharts

As the narrative of clean energy gains momentum, NextEra Energy’s dividend growth story seems poised for a long arc of success, making it a beacon in uncertain times.

Final Glow of NextEra Energy

To encapsulate NextEra Energy in a nutshell, it emerges as a beacon of growth within the utility sector, trading at an appealing valuation despite a promising future outlook. While yield-hungry investors may look elsewhere, those seeking a blend of growth and stability could find the luminous aura of NextEra Energy irresistible.

Should you invest $1,000 in NextEra Energy right now?

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Reuben Gregg Brewer holds no position in the mentioned stocks. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool adheres to a disclosure policy.

The opinions expressed here are those of the author and do not reflect the views of Nasdaq, Inc.