Dividend Aristocrats In Focus: NextEra Energy

There are several new entries following dividend increases in 2020, one of which is utility giant NextEra Energy, Inc. (NEE).

This article will discuss NextEra Energy’s business model, growth prospects, and valuation to determine whether it is an attractive stock for income investors right now.

Business Overview

With a market capitalization of $158 billion, NextEra Energy has grown into one of the largest utility companies in the world since its founding in 1925. While the company does have nuclear power plants in Iowa, New Hampshire, and Wisconsin, it is in Florida where NextEra Energy has the vast majority of its business.

The company consists of three operating segments, including: Florida Power & Light, NextEra Energy Resources and Gulf Power. NextEra Energy’s Florida Power & Light and Gulf Power segments are rate-regulated electric utilities that serves more than 5.6 million customer accounts in Florida.

NextEra Energy also owns 83% of NextEra Energy Partners LP (NEP), a Master Limited Partnership that owns, operates, and acquires contracted clean energy projects. You can see NEP featured in our top MLP list here.

NextEra Energy is the largest generator of wind and solar energy in the world. The company receives around two-thirds of adjusted earnings from its electric utility business, with the renewable energy business providing the remainder.

On January 26, 2021, the company recently reported earning results for the period ending December 31, 2020.

Source: Investor Presentation

For the quarter, revenue declined 4.2% to $4.39 billion, which was $1.32 billion less than expected. The company had a net earnings loss of $5 million which compared unfavorably to $975 million of earnings in the previous year. Adjusting for a $1.2 billion impairment charge on investments in the Mountain Valley Natural gas pipeline, earnings for the fourth quarter totaled $785 million, or $0.40. per share. This was an 11.1% increase in earnings-per-share from the prior year.

For the full year, adjusted earnings-per-share increased 10.5%.

NextEra has proven very successful at growing earnings-per-share over the long-term. From 2011 through 2019, adjusted earnings-per-share have increased with a compound annual growth rate of 6.7%.

Growth Prospects

NextEra benefits from several key factors that should enable the company to continue to grow. The company’s utility business is well-positioned to capture new customers as it resides in one of the largest states in the country. Florida’s population also continues to grow, which should provide the company the potential for additional customers.

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Disclosure: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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