Assessing the Sustainability and Growth of NextEra Energy Inc's Dividends
NextEra Energy Inc (NEE, Financial) recently announced a dividend of $0.47 per share, payable on 2023-12-15, with the ex-dividend date set for 2023-11-22. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into NextEra Energy Inc's dividend performance and assess its sustainability.
What Does NextEra Energy Inc Do?
NextEra Energy Inc's regulated utility, Florida Power & Light, is the largest rate-regulated utility in Florida. The utility distributes power to nearly 6 million customer accounts in Florida and owns 32 gigawatts of generation. FP&L contributes roughly 70% of NextEra Energy Inc's consolidated operating earnings. NextEra Energy Resources, the renewable energy segment, generates and sells power throughout the United States and Canada with more than 25 GW of generation capacity, including natural gas, nuclear, wind, and solar.
A Glimpse at NextEra Energy Inc's Dividend History
NextEra Energy Inc has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. NextEra Energy Inc has increased its dividend each year since 1995, earning it the status of a dividend aristocrat, a prestigious designation for companies that have raised their dividends annually for at least 28 consecutive years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down NextEra Energy Inc's Dividend Yield and Growth
As of today, NextEra Energy Inc currently has a 12-month trailing dividend yield of 3.19% and a 12-month forward dividend yield of 3.26%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, NextEra Energy Inc's annual dividend growth rate was 10.80%. Extended to a five-year horizon, this rate increased to 11.60% per year. And over the past decade, NextEra Energy Inc's annual dividends per share growth rate stands at an impressive 11.30%. Based on NextEra Energy Inc's dividend yield and five-year growth rate, the 5-year yield on cost of NextEra Energy Inc stock as of today is approximately 5.52%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, NextEra Energy Inc's dividend payout ratio is 0.48. NextEra Energy Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks NextEra Energy Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. NextEra Energy Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and NextEra Energy Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. NextEra Energy Inc's revenue has increased by approximately 2.30% per year on average, a rate that underperforms approximately 75.36% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, NextEra Energy Inc's earnings increased by approximately 7.80% per year on average, a rate that underperforms approximately 40.72% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -5.80%, which underperforms approximately 78.99% of global competitors.
Engaging Conclusion
In conclusion, NextEra Energy Inc's consistent dividend history, robust growth in dividends per share, and a reasonable payout ratio, combined with a strong profitability rank, paint a picture of a company committed to rewarding its shareholders. However, the growth metrics present a mixed view, with revenue growth underperforming many competitors, and a negative EBITDA growth rate over the past five years. Investors should weigh these factors when considering the long-term sustainability of NextEra Energy Inc's dividend payments. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for informed investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
