The Top Utilities’ Historical Dividend Growth: NEE, D, and SO
Renewables titan NextEra Energy (NEE) beats peers in terms of dividend growth by a huge margin, having raised its per-share dividend by 9.6%, compounded annually, over the past five years. This is more than double the average dividend growth of 4.2%, compounded annually, in our select group of the four biggest utilities over the same period.
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Average dividend growth
The respective dividend growths of Duke Energy (DUK) and Southern Company (SO) have lagged behind those of peers during this period. Duke Energy has increased its per-share dividend by 2.5%, while Southern Company managed to grow its per-share dividend by 3.6%, compounded annually, over the past five years.
Dominion Energy also stands tall in terms of dividend growth, having raised its per-share dividend by 7.3%, compounded annually, in the last five years.
The main driver of these utilities’ dividend increases was earnings growth. NextEra Energy and Dominion Energy are among the fastest-growing utilities in the sector (XLU), while Southern Company’s and Duke Energy’s earnings grew ~4%–6% annually, which is in line with the industry average.
During the same period, NextEra Energy’s earnings grew ~8%, compounded annually. Contributions from regulated operations in Florida—the country’s third most-populous state—in addition to long-term contracts for competitive operations and a strong renewables portfolio have all accentuated NextEra Energy’s earnings for the past several years.
To read more about NextEra Energy’s operations and financials, check out Market Realist’s Should Utility Investors Consider NextEra Energy?