Utility Sector Ideas

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>>> NextEra Energy is a growth and income gem


https://finance.yahoo.com/news/3-utility-stocks-buy-hand-101100971.html


NextEra Energy's 3.7% dividend yield is modest compared to the other two utilities on this list. In fact, it is only 10 basis points above the average of the broader utility sector. But the yield is near a 10-year high for NextEra Energy, suggesting the stock is cheap today.

However, the real linchpin in the story is the average annualized dividend growth of around 10% over the past decade, extremely high by utility standards. Management expects to raise the dividend by that much again in 2024.

The story here comes in two parts. First, NextEra Energy owns the largest utility in Florida, which is a state with a growing population. That's the solid foundation. On top of that, NextEra Energy owns one of the world's largest portfolios of solar and wind power assets. This is a growth business, with management hoping to double its clean energy capacity by 2026.

The combination of these two businesses is expected to produce earnings growth of between 6% and 8% a year through 2026. Even if dividend growth only tracks along with earnings growth after 2024, that's still a great outcome for a growth- and income-oriented utility. Investors should look at this stock, which has increased its dividend annually for nearly three decades and is still on sale.

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