Title: Keeping the Engine Running: A Look at This Powerful Dividend Stock's Continued Growth
NextEra Energy's Dividend Growth Juggernaut
With a stellar dividend history, NextEra Energy (NEE -1.14%) has been a standout in the energy sector. This utility giant has boosted its dividend annually for the past three decades, delivering a staggering 10% compound annual growth rate over the past 20 years. This impressive performance has driven total returns unmatched by the S&P 500's 10%, at over 15% annually.
The company's strong position is expected to continue as it works hand-in-hand with an expanding list of companies to meet their power needs.
A Preferred Energy Partner
A significant factor contributing to NextEra's growth is its rapidly expanding energy resources segment. This business unit owns a swelling portfolio of power-generating assets, supplying electricity to other utilities and major corporations under long-term, fixed-rate power purchase agreements. The company frequently develops renewable energy projects tailored to meet customers' specific needs.
For instance, NextEra Energy recently collaborated with refining giant Phillips 66 (PSX 0.02%) to establish a 30.2-megawatt solar energy facility. This project, situated on 88 acres of land owned by Phillips 66, will provide half the power required for Phillips 66's newly constructed renewable fuels facility. Not only will this reduce the carbon intensity of the fuel, but it will also provide NextEra Energy with steady cash flow, as Phillips 66 will pay for the electricity.
The partnership with Phillips 66 is just one example of NextEra Energy's customer-centric approach. The company is currently engaged in several large-scale collaborations, including a 4.5 gigawatt (GW) solar and energy storage project development agreement with fellow utility Entergy (ETR 0.93%). This venture will enable Entergy to offer its customers low-cost renewable energy while lowering its own carbon footprint.
NextEra Energy is also in talks with two Fortune 500 companies to potentially establish renewable and energy storage projects, totalling up to 10.5 GW between now and 2030.
Unstoppable Growth
NextEra's energy resources segment secured over 24 GW of projects when it reported its third-quarter results in late October. This figure doesn't include projects developed for the two Fortune 500 companies or all of what it's building for Entergy. As a result, the company's project backlog is more extensive than the original number indicates.
These secured projects and those under development support NextEra's long-term growth goals, with the company expecting to complete 36.5 GW to 46.5 GW of projects from 2024 to 2027. It's anticipated that its development pace will accelerate during this period, reaching a range of 22.4-29.4 GW in 2026 and 2027. These projects and efforts to expand its Florida-based utility should drive 6% to 8% adjusted EPS growth through 2027, with dividend growth projected at around 10% per year through at least 2026.
Given the partnerships with Entergy and the two Fortune 500 companies, NextEra Energy has the potential to maintain growth throughout the 2020s. Add to this the massive surge in renewable energy demand due to AI data centers, electric vehicles, and manufacturing onshoring, and the United States is expected to deploy three times more renewable energy capacity over the next seven years than it did in the previous seven years. As a leader in developing renewables, NextEra Energy is perfectly positioned to capitalize on this booming opportunity.
A Secure Source of Growing Dividends
NextEra Energy's reputation as a dividend growth champion shows no signs of dwindling. Its history of stable dividend payments suggests a commitment to sustainability and profitability that is likely to persist in the future. With a 2.8% yield, compared to the S&P 500's 1.2%, investors looking for above-average dividends have a compelling choice. This yield is poised to grow exponentially, making NextEra Energy an excellent option for investors seeking reliable, growing income.
Enrichment Data References: + 1: "NextEra Energy Partners to Sell Stake in U.S. Portfolio for $1.7 Billion" (Reuters) + 2: "NextEra Energy's 2024 Q3 Earnings" (Yahoo Finance) + 3: "NextEra Energy Investor Presentation" (NextEra Energy) + 4: "NextEra Energy's Florida Power & Light Company Plans Four-Year Rate Plan" (NextEra Energy) + 5: "NextEra Energy's Commitment to Sustainability" (NextEra Energy)
Due to its focus on renewable energy projects and partnerships with major corporations, NextEra Energy is continuously exploring opportunities for financial growth in the investing world. The company's income stream from these collaborations, such as the one with Phillips 66, provides a stable source of finance for its operations.
Given NextEra Energy's track record of annual dividend increases for three decades, investors seeking reliable growing dividends may view it as an attractive option in the finance market.
