Could buying NextEra energy stock today set you up for life?
If you’re looking to create lifetime income by buying dividend stocks, you might want to ignore them. Next Energy (NYSE: NO) Because the yield is “only” 3%. That’s about average for utilities, and there are plenty of higher-yielding options to consider in and outside of the utility sector. But there is one important thing to consider here that might change your mind. NextEra’s dividend has grown, and looks set to continue growing, at a particularly fast pace. Here’s why dividends can set you up for a lifetime of income.
NextEra is actually two companies in one. The core of the business is his. Controlled utility Operation. This is basically a slow and steady basis. Like all regulated utilities, NextEra’s Florida-based utility operations are monopolized in the markets it serves. Then capital investment plans and price increases must be approved by the government. In most cases, this is not an approach that leads to rapid growth.
That said, the state of Florida has benefited from immigration for decades, so its population is growing rapidly. More customers means more revenue, and a higher level of investment is required to meet demand. So even though the dominant side of NextEra Energy’s business is the slower-growing side, it still has an advantage relative to other utilities.
Next Era Energy is another important business. Clean energy system. This business is built on long-term contracts, so it is a very reliable source of money. The demand for clean energy is high, and the company can expand this business quickly. For example, management expects to install up to 46.5 gigawatts of renewable energy by 2027, up from 36 gigawatts today. In other words, this business can double in size within a few years.
If you buy NextEra Energy now, you’ll collect a 3% dividend yield, which, as noted, is about average for the utility sector. But NextEra Energy stands out from the average utility in one very important way — dividend growth. Over the past ten years, the dividend has grown by roughly 10% per year. That 5% growth is huge in the utility sector, which is considered very good.
NextEra Energy’s dividend will grow 10 percent annually through at least 2026. Yield on NextEra Energy’s purchase price will be an important metric to consider.
