Analyzing NextEra Energy’s 3Q15 Cash Flows and Capital Expenditure


Nov. 18 2015, Updated 2:04 p.m. ET

Cash flows

NextEra Energy (NEE) generated $1.6 billion in operating cash flows in 3Q15, which was similar to 3Q14. Florida Power and Light (or FPL) contributed $636 million, or 40%, to total operating cash flows in 3Q15.

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Capital expenditure

Capital expenditure plays an important role for utilities in increasing their regulatory capital base, thereby providing higher returns for utilities, since regulated tariff also takes into account return on equity. Over the last few years, utilities (XLU) took advantage of low interest rates by modernizing their plants and building new capacity.

Out of the $1.9 billion NEE spent during the quarter, $990 million went to FPL, $774 million went to NextEra Energy Resources (or NEER), and the remaining $233 million went to corporate purposes.

FPL spent $200 million on building new capacity and another $146 million on expanding existing capacities. FPL spent $440 million on transmission and distribution infrastructure and $99 million on restocking nuclear fuel.

During 3Q15, NEER spent $305 million on new wind capacities, $306 million on new solar capacities, and $71 million on nuclear fuel.


As stated earlier, NextEra Energy (NEE) declared a dividend of $0.77 per share during the quarter, resulting in a dividend payout ratio of 40% of earnings during the quarter. NEE’s dividend for fiscal 2015 will be $3.08 a share. Based on the closing stock price as of November 3, NEE had a dividend yield of 3.01%, much lower than Duke Energy’s (DUK) 4.6% and the SPDR Utilities ETF’s (XLU) 3.6%.


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