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NextEra Energy (NYSE:NEE) Stock a Buy: Renewables Rising

Tuesday, November 17, 2020 | Sean Sechler
NextEra Energy (NYSE:NEE) Stock a Buy: Renewables Rising

Investing in the renewable energy sector makes a lot of sense at this time. The global renewable energy market is expected to reach a valuation of $2.15 billion in 2025 and there will certainly be companies that benefit from this growth. With the prospects of a Joe Biden presidency and improving technology that makes clean energy more affordable, it’s clear that investors should have their eye on the best renewable energy stocks going forward.

The problem with some renewable energy stocks is that they can be very volatile thanks to the industry being less proven than traditional energy sources. That’s what makes a company like NextEra Energy (NYSE:NEE) so attractive. It’s a stock that offers investors exposure to the burgeoning renewable energy sector but also features stable earnings and dividend payments thanks to its large and established electric power business. Here are some more details about why NextEra Energy stock is a buy.

One of the Largest Electric Power Companies in North America

NextEra Energy is a holding company for three different business segments, Florida Power & Light, Gulf Power, and NextEra Energy Resources. That’s a big reason why this company is one of the more attractive renewable energy stocks to own. Since Florida Power & Light provides electricity to over 5 million customers in Florida, investors will own a successful regulated utility company along with its rapidly-growing renewables business. Most solar and renewable energy stocks don’t offer the same predictable revenue streams along with the earnings upside. It’s also worth noting that the majority of the company’s U.S. electric revenue comes from residential customers, which is good news for NextEra Energy since more people working from homeover the long run should drive electricity spending up.

In addition to Florida Power & Light, the subsidiary NextEra Energy Resources is the largest U.S. generator of wind and solar power and a world leader in battery storage. As these renewable energy sources become more affordable, usage should increase across the world which in turn will lead to strong revenues for this business segment. NextEra Energy Resources continues to invest in new projects that will help it expand and improve its profit margins. NextEra plans for over $20 billion in capital projects from 2020 through 2023. These projects will include wind generation, natural gas pipelines, and battery technology, all of which could pay off big for shareholders over time.

Secure Dividends & Strong Backlog

Another huge plus with NextEra Energy stock is the fact that it pays out a dividend yield of 1.8%. Thanks to steady cash flow from its electric business, investors in this company will own a solid dividend-payer with the potential for strong earnings growth in the coming years. The company has increased its dividend payout for 26 consecutive years and its projected dividend growth in 2020-2023 is 10%. Since NextEra Energy operates a utility business that holds up well during recessions, you should be able to count on continuous dividend payouts over time.

Additionally, it’s great to see that Next Era Energy Resources had a company record renewables backlog of over 15,000 megawatts as of Q3, which is larger than the entire existing renewables portfolio for the company. That backlog includes providing California with a new 325-MW, 4–hour battery storage system that will be the largest stand-alone storage project in the world. These are the types of projects that will not only help NextEra Energy grow as a company but also help to make the world a better place.

Final Thoughts

With the inevitable widespread adaption of renewable energy sources around the globe, having a company like NextEra Energy in your portfolio makes a lot of sense. You can help support an eco-friendly cause along with potentially growing your investment account in the process. Thanks to its established revenue streams, continuous investment in new clean energy technologies, and reliable dividend payouts, NextEra Energy is one of the best options in the sector.

Buying one of the leading utility companies in the U.S. that could make a positive impact on the renewable energy industry over the next decade is definitely an attractive prospect. If you are looking for a lower-risk way to gain exposure to renewable energy, look no further than NextEra Energy stock.

Companies Mentioned in This Article

CompanyBeat the Market™ RankCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
NextEra Energy (NEE)2.2$75.13flat1.86%37.85Buy$70.42
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7 Stocks That Don’t Care Who Wins the Election

Many investors confuse volatility in an election year with the market performance during an election year. Historically, investors don’t care all that much who wins the election.

Historical evidence shows that the market will rise after a Republican wins and dip after a Democrat wins. But that same evidence suggests that those trends flip in the first year of a presidency. It just proves that there’s a difference between campaigning and governing.

What can be different is where investors choose to make their money. Certain sectors perform better under a Republican administration than a Democrat administration. But that’s not the focus of this presentation.

Rather, we’re taking a look at companies and stocks that should profit no matter who occupies 1600 Pennsylvania Avenue. Some of these will be familiar names, but we’re trying not to be too obvious. Amazon (NASDAQ:AMZN) is a buy no matter who wins. You don’t need an article to tell you that.

And while I wouldn’t call this a list of “coronavirus stocks,” the list has some resemblance. The fact is every major event in our nation’s history has a ripple effect. And technologies that we never imagined would become “a thing” become the most important thing in our lives.

View the "7 Stocks That Don’t Care Who Wins the Election".

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