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Are You Looking for a High-Growth Dividend Stock? NextEra Energy (NEE) Could Be a Great Choice
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
NextEra Energy in Focus
Based in Juno Beach, NextEra Energy (NEE - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 11.39%. The parent company of Florida Power & Light Co. Is currently shelling out a dividend of $1.25 per share, with a dividend yield of 2.58%. This compares to the Utility - Electric Power industry's yield of 2.88% and the S&P 500's yield of 1.99%.
Looking at dividend growth, the company's current annualized dividend of $5 is up 12.6% from last year. Over the last 5 years, NextEra Energy has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.12%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. NextEra's current payout ratio is 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, NEE expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $8.40 per share, representing a year-over-year earnings growth rate of 9.09%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that NEE is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Are You Looking for a High-Growth Dividend Stock? NextEra Energy (NEE) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
NextEra Energy in Focus
Based in Juno Beach, NextEra Energy (NEE - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 11.39%. The parent company of Florida Power & Light Co. Is currently shelling out a dividend of $1.25 per share, with a dividend yield of 2.58%. This compares to the Utility - Electric Power industry's yield of 2.88% and the S&P 500's yield of 1.99%.
Looking at dividend growth, the company's current annualized dividend of $5 is up 12.6% from last year. Over the last 5 years, NextEra Energy has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.12%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. NextEra's current payout ratio is 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, NEE expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $8.40 per share, representing a year-over-year earnings growth rate of 9.09%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that NEE is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).