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NEE or SO: Which Utility Stock Deserves a Spot in Your Portfolio?
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Key Takeaways
NEE and SO are investing heavily in clean energy as they transition toward low-carbon power generation.
SO registered positive movement in 2026 earnings estimate, while NEE estimates remained the same.
NEE trades at a lower P/E than SO but trails in recent stock performance and return on equity.
The Zacks Utility – Electric Power industry presents an attractive investment opportunity, driven by stable cash flows and the predictability of regulated business models. Most domestic utilities operate under long-term power purchase agreements, insulating them from economic fluctuations. Growing electricity demand, coupled with consistent capital investments, is boosting operational efficiency, enabling these companies to generate reliable earnings and sustain steady dividend payouts.
The industry is also undergoing a significant transformation as it shifts toward cleaner energy sources. Many utility companies are ramping up investments in renewable infrastructure, such as solar, wind, battery storage and modernized grids. As the global focus intensifies on decarbonization, utilities that proactively embrace renewable and low-carbon technologies are poised to gain from lower fuel cost volatility and access to a broader market, strengthening their attractiveness to both institutional and retail investors. Amid such a backdrop, let’s compare NextEra Energy (NEE - Free Report) and The Southern Company (SO - Free Report) . These prominent U.S. electric utilities are actively investing in renewable energy, making them pivotal players in the shift toward cleaner power generation.
NextEra Energy’s clean energy investment and robust growth potential make it a strong operator in the utility space. Its regulated utility arm, Florida Power & Light — the largest in the United States — delivers reliable cash flows through a steady, rate-regulated framework. Meanwhile, its unregulated subsidiary, NextEra Energy Resources, leads the world in wind and solar energy generation, fueling sustained growth through an expanding portfolio of renewable projects and battery storage solutions. With a clear strategic commitment to decarbonization, disciplined capital deployment, and strong ESG performance, NextEra is well-positioned to thrive as the energy sector continues to evolve toward a cleaner future.
The Southern Company provides dependable long-term value through its regulated utility operations and forward-looking clean energy investments. Backed by a diverse power generation portfolio, a broad customer base and a supportive regulatory framework, the company consistently delivers stable earnings and steady dividend growth. Its proactive approach to decarbonization, highlighted by investments in nuclear energy and the integration of renewables, positions it strongly to navigate and benefit from the ongoing energy transition.
Given that both companies are prominent players in the utility industry, it’s worthwhile to take a closer look at their fundamentals. A detailed comparison will help determine which stock offers a more attractive investment opportunity for investors.
NEE & SO’s Earnings Growth Projections
The Zacks Consensus Estimate for NextEra Energy’s earnings per share in 2025 and 2026 has remained the same in the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 7.89%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for The Southern Company’s earnings per share in 2025 has remained the same in the past 60 days. The estimate for 2026 earnings per share has moved up by 0.44% in the same period. Long-term earnings growth per share is pegged at 6.77%.
Image Source: Zacks Investment Research
NEE & SO’s Dividend Yield
Dividends are regular payments made by a company to its shareholders and represent a direct way for investors to earn a return on their investment. They are an important indicator of a company’s financial health and stability, often signaling strong cash flow and consistent earnings. Utilities are known for regular dividend payments to their shareholders.
Currently, the dividend yield for NextEra Energy is 3.15%, while the same for The Southern Company is 3.10%.
Return on Equity (ROE)
ROE is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value. NEE’s current ROE is 12.31% compared with SO’s ROE of 12.7%. Both companies outperform the industry’s ROE of 10.16%.
Image Source: Zacks Investment Research
NEE & SO’s Capital Investment
NextEra Energy plans over $74B in capital investment through 2029 to expand clean energy capacity.
The Southern Company plans to invest $63 billion in capital expenditures from 2025 through 2029 to strengthen its operations.
Debt to Capital
The Zacks Utilities sector is a capital-intensive one, and huge investments are required at regular intervals to upgrade, maintain and expand operations. The usage of new evolving technology also requires investments. Therefore, utilities borrow from the market and add it to their internal cash generation to fund their long-term investments.
NEE’s debt-to-capital currently stands at 57.61% compared with SO’s debt-to-capital of 62.84%. Both companies are using higher debt to fund their business, as the industry’s debt-to-capital stands at 54.08%.
Valuation
NextEra Energy currently appears to be trading at a discount compared with The Southern Company on a Price/Earnings Forward 12-month basis. (P/E- F12M).
NEE is currently trading at 18.69X, while SO is trading at 21.44X compared with the industry’s 14.84X.
Price Performance
The Southern Company’s shares have gained 14.2% in the past six months compared with NextEra Energy’s rally of 1.9% and the industry’s return of 10.9%.
Image Source: Zacks Investment Research
Conclusion
NextEra Energy and The Southern Company are strategically investing in their infrastructure to serve customers more efficiently and reliably.
Based on the above discussion, The Southern Company currently has a marginal edge over NEE, despite the stocks carrying a Zacks Rank #3 (Hold) each. SO’s positive movement in earnings estimates, higher ROE, and better price performance make it a better choice in the utility space.
Image: Bigstock
NEE or SO: Which Utility Stock Deserves a Spot in Your Portfolio?
Key Takeaways
The Zacks Utility – Electric Power industry presents an attractive investment opportunity, driven by stable cash flows and the predictability of regulated business models. Most domestic utilities operate under long-term power purchase agreements, insulating them from economic fluctuations. Growing electricity demand, coupled with consistent capital investments, is boosting operational efficiency, enabling these companies to generate reliable earnings and sustain steady dividend payouts.
The industry is also undergoing a significant transformation as it shifts toward cleaner energy sources. Many utility companies are ramping up investments in renewable infrastructure, such as solar, wind, battery storage and modernized grids. As the global focus intensifies on decarbonization, utilities that proactively embrace renewable and low-carbon technologies are poised to gain from lower fuel cost volatility and access to a broader market, strengthening their attractiveness to both institutional and retail investors. Amid such a backdrop, let’s compare NextEra Energy (NEE - Free Report) and The Southern Company (SO - Free Report) . These prominent U.S. electric utilities are actively investing in renewable energy, making them pivotal players in the shift toward cleaner power generation.
NextEra Energy’s clean energy investment and robust growth potential make it a strong operator in the utility space. Its regulated utility arm, Florida Power & Light — the largest in the United States — delivers reliable cash flows through a steady, rate-regulated framework. Meanwhile, its unregulated subsidiary, NextEra Energy Resources, leads the world in wind and solar energy generation, fueling sustained growth through an expanding portfolio of renewable projects and battery storage solutions. With a clear strategic commitment to decarbonization, disciplined capital deployment, and strong ESG performance, NextEra is well-positioned to thrive as the energy sector continues to evolve toward a cleaner future.
The Southern Company provides dependable long-term value through its regulated utility operations and forward-looking clean energy investments. Backed by a diverse power generation portfolio, a broad customer base and a supportive regulatory framework, the company consistently delivers stable earnings and steady dividend growth. Its proactive approach to decarbonization, highlighted by investments in nuclear energy and the integration of renewables, positions it strongly to navigate and benefit from the ongoing energy transition.
Given that both companies are prominent players in the utility industry, it’s worthwhile to take a closer look at their fundamentals. A detailed comparison will help determine which stock offers a more attractive investment opportunity for investors.
NEE & SO’s Earnings Growth Projections
The Zacks Consensus Estimate for NextEra Energy’s earnings per share in 2025 and 2026 has remained the same in the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 7.89%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for The Southern Company’s earnings per share in 2025 has remained the same in the past 60 days. The estimate for 2026 earnings per share has moved up by 0.44% in the same period. Long-term earnings growth per share is pegged at 6.77%.
Image Source: Zacks Investment Research
NEE & SO’s Dividend Yield
Dividends are regular payments made by a company to its shareholders and represent a direct way for investors to earn a return on their investment. They are an important indicator of a company’s financial health and stability, often signaling strong cash flow and consistent earnings. Utilities are known for regular dividend payments to their shareholders.
Currently, the dividend yield for NextEra Energy is 3.15%, while the same for The Southern Company is 3.10%.
Return on Equity (ROE)
ROE is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value. NEE’s current ROE is 12.31% compared with SO’s ROE of 12.7%. Both companies outperform the industry’s ROE of 10.16%.
Image Source: Zacks Investment Research
NEE & SO’s Capital Investment
NextEra Energy plans over $74B in capital investment through 2029 to expand clean energy capacity.
The Southern Company plans to invest $63 billion in capital expenditures from 2025 through 2029 to strengthen its operations.
Debt to Capital
The Zacks Utilities sector is a capital-intensive one, and huge investments are required at regular intervals to upgrade, maintain and expand operations. The usage of new evolving technology also requires investments. Therefore, utilities borrow from the market and add it to their internal cash generation to fund their long-term investments.
NEE’s debt-to-capital currently stands at 57.61% compared with SO’s debt-to-capital of 62.84%. Both companies are using higher debt to fund their business, as the industry’s debt-to-capital stands at 54.08%.
Valuation
NextEra Energy currently appears to be trading at a discount compared with The Southern Company on a Price/Earnings Forward 12-month basis. (P/E- F12M).
NEE is currently trading at 18.69X, while SO is trading at 21.44X compared with the industry’s 14.84X.
Price Performance
The Southern Company’s shares have gained 14.2% in the past six months compared with NextEra Energy’s rally of 1.9% and the industry’s return of 10.9%.
Image Source: Zacks Investment Research
Conclusion
NextEra Energy and The Southern Company are strategically investing in their infrastructure to serve customers more efficiently and reliably.
Based on the above discussion, The Southern Company currently has a marginal edge over NEE, despite the stocks carrying a Zacks Rank #3 (Hold) each. SO’s positive movement in earnings estimates, higher ROE, and better price performance make it a better choice in the utility space.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.