Renewables titan NextEra Energy (NEE) defeated its peers in terms of dividend growth by a huge margin. NextEra Energy raised its dividend per share 10.4%, compounded annually, in the past five years. It’s more than double utilities’ average dividend growth of ~4%, compounded annually, during the same period.
Average dividend growth
Duke Energy (DUK) and Southern Company’s (SO) dividend growth significantly lagged its peers during this period. Duke Energy increased its dividend per share 2.9%, compounded annually. Southern Company managed to grow its dividend per share 3.6%, compounded annually, in the past five years.
Dominion Energy (D) also stands tall in terms of dividend growth. Dominion Energy raised its dividend per share 7.5%, compounded annually, in the last five years.
The main driver of these utilities’ dividend increases was their earnings growth. NextEra Energy and Dominion Energy are among the fastest-growing utilities in the sector (XLU), while Southern Company and Duke Energy’s earnings grew 4%–6% annually—in line with the industry average.
In the last decade, NextEra Energy’s earnings per share grew more than 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 an unbeatable renewables portfolio have all accentuated NextEra Energy’s earnings in the past few years.
To learn more, read An Investor’s Guide: A Look at the 10 Largest S&P 500 Utilities.