While NextEra Energy’s (NEE) earnings increased more than 8.0% compounded annually in the last decade, its peers’ average earnings growth stood at ~5.0%. Higher earnings growth facilitated NextEra Energy’s higher dividend growth.
Because of its substantially larger renewables portfolio, a healthy mix of competitive and regulated operations, as well as a territorial monopoly in Florida—the fourth-most-populous state, NextEra Energy previously achieved higher earnings growth.
NextEra Energy’s higher earnings drove its stock in the last few years. With stronger market performance and healthier dividend growth, NextEra Energy’s total returns significantly outperformed its peers.
In the last one-year period, NEE’s total returns came in at 27.0%. The broader utilities (XLU)(IDU)(VPU) returned 5.0% in the same period. NEE’s total returns in the last five years came in at 19.0% compounded annually. The broader utilities returned 10.0% compounded annually in the same period.
NextEra Energy outperformed not only its peers but also the broader market in terms of total returns in the last one-year, five-year, and ten-year timeframes. Total return considers stock appreciation as well as dividends paid in a particular period.
What’s ahead for NextEra Energy?
With ~$44.0 billion of planned capital investments, NextEra Energy’s management aims to grow its per-share earnings by 7.0% per year through 2021. This is higher than the industry average of ~5.0%. As NEE’s principal market, Florida’s population growth is faster than the nation’s average annual growth rate of ~1.6%. This differential could drive the utility’s earnings growth.
After their two-month-long span of weakness, utilities have demonstrated some recent signs of recovery. For more information, please read S&P 500 Utilities at a 52-Week Low Offer a Big Gain Potential.