NextEra Energy (NEE) isn’t your run-of-the-mill utility. It has a heavy focus on renewable energy like wind, nuclear, and solar.
It generates more than $16 billion of revenue, and has nearly 46,000 megawatts of generating capacity. It has more than 14,000 employees in 30 U.S. states and Canada.
NextEra is also an uncommon stock in the utility sector, because of its high rate of dividend growth.
The company recently increased its dividend by 13%.
And, the company projects 12%-14% annual dividend growth through 2018.
Double-digit dividend increases of this nature are a rarity in the utility sector.
NextEra has now increased its dividend for 22 years in a row. It is a Dividend Achiever, a group of 271 stocks with 10+ years of consecutive dividend increases.
You can see the full Dividend Achievers List here.
This article will discuss the key factors that differentiate NextEra from the rest of the pack, and why it is a premier dividend growth stock in the utility sector.
Business Overview
NextEra has a standard utility generation business, but with an added twist. The company is comprised of two operating subsidiaries: Florida Power & Light (FPL), and NextEra Energy Resources, its clean-energy segment.
Florida Power & Light is a standard electric utility. It has 4.9 million customer accounts, and $45.5 billion of operating assets.
Source: February/March 2017 Investor Presentation, page 10
Overall, half of NextEra’s generation capacity comes from natural gas, but it also has a sizable renewables portfolio.
Source: February/March 2017 Investor Presentation, page 5
Approximately 26% of NextEra’s generation comes from nuclear energy, and another 20% is derived from wind.
The benefit of a large renewable portfolio is that, as demand grows, costs are coming down.
In addition, NextEra has one of the lowest rates of carbon dioxide emissions in the industry, which will help shield it from regulatory and environmental risk going forward.
