Considering an Investment in NextEra Energy Stock Today for Lifelong Profits?
Looking to construct a lifetime income through dividend stocks, you might overlook NextEra Energy (NEE -0.85%) due to its "merely" 3% yield. Given the abundance of higher-yielding options, it's understandable to pass. But there's a crucial factor that could sway your decision - NextEra's exceptional dividend growth, as yet to show signs of slowing down.
Unmasking NextEra Energy's Double Identity
NextEra is essentially a two-headed beast. At its core is the regulated utility side, which, while providing a steady foundation, tends to be a slower-growing segment. Regulated utilities benefit from population growth - Florida's, for instance, has been soaring for years. The result: more customers, requiring higher investments to keep up with demand. Thus, even the slower-growing side of NextEra Energy gains a competitive edge.
However, this utility titan also boasts its clean energy operation. This branch thrives on long-term contracts and boasts high demand. NextEra expects to install up to 46.5 gigawatts of renewable energy by 2027, marking a potential doubling of the sector's size in a few short years!
What's NextEra's Current Yield?
If you decide to invest in NextEra Energy now, you'll receive a 3% dividend yield, not too shabby compared to the utility sector average. Yet, it's NextEra's outstanding dividend growth that sets it apart. Over the past decade, the yield has ballooned by approximately 10% annually, far surpassing the norm for utilities.
NextEra's confidence in its dividend growth hasn't wavered. They expect it to continue growing at a monstrous 10% rate through at least 2026. The company's history suggests this could extend beyond 2026, assuming next to no major obstacles arise.
Consider the math. If you purchased NextEra Energy shares at their highest price point in 2013, each share would've cost around $22.45 (post 4:1 stock split in 2020). A quarterly dividend of $0.165 per share resulted in an approximately 2.9% yield at the time - shockingly close to today's yield. Yet, as the dividend expanded, today's payout climbs to around $0.515 per share. This equates to a yield on purchase price of a staggering 9%! To add to the good news, NextEra's shares currently trade around $69.
NextEra Energy - The Stealthy High-Yield Dividend Stock
High-yield stocks are often characterized by modest growth in the income stream. While earning extra income today is pleasing, restricted growth translates to low single-digit income increases over time, approximately in-line with inflation. By opting for a dividend growth stock like NextEra, you could amplify your income portfolio, all while potentially surpassing inflation's growth over the long term.
While NextEra might not seem like a high-yield stock now, its rapid dividend growth could transform it into one of your highest-yielding investments in the future. With dividends likely to persist; and your income continuing to outpace inflation, the future could reward those who invest in NextEra Energy.
[1] FPL Group. (2023, March 22). Corporate Information. Retrieved from https://www.nexteraenergy.com/about/fplgroup[2] NextEra Energy. (2023, March 22). NextEra Energy Resources. Retrieved from https://www.nexteraenergy.com/businesses/nextera-energy-resources[3] NextEra Energy. (2023, March 22). Quarterly Earnings Results. Retrieved from https://www.nexteraenergy.com/investors/financials[4] NextEra Energy. (2023, March 22). Dividends. Retrieved from https://www.nexteraenergy.com/investors/dividends
- In light of NextEra Energy's exceptional dividend growth, even with a lower initial yield of 3%, it could be wise to consider investing in this stock as part of a diversified finance portfolio, given its potential to outpace inflation and provide higher returns in the future.
- If you're looking to grow your wealth through investing in finance, NextEra Energy's strategy of balancing its regulated utility business with its clean energy operation could yield attractive returns, especially considering its history of robust dividend growth and expectations for continued expansion in the renewable energy sector.
