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NextEra Energy (NEE) is a Top Dividend Stock Right Now: Should You Buy?
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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
Headquartered in Juno Beach, NextEra Energy (NEE - Free Report) is a Utilities stock that has seen a price change of -11.69% so far this year. The parent company of Florida Power & Light Co. Is currently shelling out a dividend of $0.47 per share, with a dividend yield of 2.53%. This compares to the Utility - Electric Power industry's yield of 3.25% and the S&P 500's yield of 1.6%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.87 is up 10% 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 10.75%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, NextEra's payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.
NEE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $3.12 per share, which represents a year-over-year growth rate of 7.59%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, NEE is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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NextEra Energy (NEE) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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
Headquartered in Juno Beach, NextEra Energy (NEE - Free Report) is a Utilities stock that has seen a price change of -11.69% so far this year. The parent company of Florida Power & Light Co. Is currently shelling out a dividend of $0.47 per share, with a dividend yield of 2.53%. This compares to the Utility - Electric Power industry's yield of 3.25% and the S&P 500's yield of 1.6%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.87 is up 10% 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 10.75%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, NextEra's payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.
NEE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $3.12 per share, which represents a year-over-year growth rate of 7.59%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, NEE is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).