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NextEra Energy: Higher Dividend Growth than Its Peers

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Dividend growth

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.

5-yr dvd growth

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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.

Earnings growth

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.

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