Utility Sector Ideas

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NextEra Energy - >>> Dividend growth you can bank on


https://www.fool.com/investing/2020/10/31/worried-about-a-stock-market-crash-buy-these-reces/


NextEra Energy (NYSE:NEE) is an incredible dividend stock to own at all times, as it offers the stability that comes with utility stocks -- much sought after during a recession -- as well as solid growth potential to power up your portfolio.

NextEra's core business includes its two electric companies that provide electricity to more than 5 million customers in Florida. It's a typical utility business with regulated revenues and stable cash flows.

NextEra's clean energy business, NextEra Energy Resources, is where the growth potential lies -- it's already the world's largest producer of wind and solar energy. Scaling up its clean-energy portfolio should lower costs and boost earnings for the company, supporting stronger dividend growth in the years to come.

In the past, NextEra's dividends grew at a compound annual rate of 9.4% between 2004 and 2019, driven by annualized growth of 8.4% in its adjusted earnings per share (EPS). NextEra's dividends have historically grown pretty much in-line with earnings, which means management's medium-term financial goal of growing adjusted EPS by high-single-digit percentages through 2023 should be followed with similar dividend raises.

The trend, in fact, should continue well beyond 2023, as the renewable energy industry is expected to attract investments worth trillions of dollars in coming decades as the adoption of clean energy gathers steam. NextEra is well poised to exploit any opportunity -- its renewables backlog in the latest quarter crossed 15 gigawatts, which is larger than the company's existing renewable capacity. If you let NextEra's modest dividend yield of 1.9% deter you, you could miss out on solid potential stock price gains backed by dividend growth.

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