NextEra Energy’s Expected Dividend Growth and Payout Ratio



NextEra Energy’s dividend statistics

NextEra Energy’s (NEE) outstanding dividend growth in the last few years contributed to its total returns. NextEra Energy’s management aims for even higher dividend per share growth in the future. NextEra Energy plans to increase its dividends 12%–14% through at least 2018. Utilities’ average expected dividend growth is ~4%–6% annually for the next few years.

NEE dvd

NextEra Energy’s lower payout ratio might bother investors—it was 55% last year. NextEra Energy’s five-year historical average payout ratio is also near the same levels. Utilities (XLU) (VPU) generally pay a large portion of their profits to shareholders in the form of dividends. NextEra Energy’s higher capital investments could be the reason for its comparatively lower payout ratio and its lower dividend yield.

Regulated utility giants Southern Company (SO) and Duke Energy’s (DUK) payout ratios were ~85%–90% in 2016.

In the next part, we’ll discuss the factors could impact NextEra Energy’s dividends going forward.

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