HomeBusinessIs NextEra Energy (NYSE:NEE) stock a dividend aristocratic buy?

Is NextEra Energy (NYSE:NEE) stock a dividend aristocratic buy?

In life, bills are unavoidable, and as expenses rise with economic growth, purchasing power can decline unless income keeps pace. To address this, I’ve focused on dividend growth investing, focusing on stocks like NextEra Energy. While I’m not yet financially independent, buying proven companies with cultures focused on rewarding shareholders has allowed my organic income growth to exceed inflation.

The Dividend Aristocrat utility, NextEra Energy (NEE), is one such holding in my dividend growth stock portfolio that is fueling my income growth. A Dividend Aristocrat is a company that has consistently increased its dividend payout for 25 consecutive years or more. As a utility company, NextEra Energy operates in the energy sector, providing essential services such as electricity and natural gas, which typically generate stable cash flow. This stability makes it a strong candidate for dividend growth investing.

After reviewing the company’s third quarter earnings report, I remain optimistic. Allow me to explain why.

Although NextEra Energy’s third-quarter financial results shared on October 23 were mixed, the results were enough for me to maintain my optimistic outlook. The company’s total revenue rose 5.5% year over year to $7.6 billion in the quarter, which was $500 million below analyst consensus. This was largely due to temporary disruptions from Hurricanes Helene and Milton and lower fuel costs that affected how much NextEra Energy could charge customers as a regulated utility.

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The company’s adjusted diluted earnings per share rose 9.6% from the year-ago period to $1.03 in the third quarter. Putting it into perspective, this was above analyst consensus for the quarter by $0.05. Lower fuel costs and operational efficiencies helped NextEra Energy’s non-GAAP net profit margin grow 130 basis points to 28.1% in the quarter.

Besides the recent results, another reason I like NextEra Energy is that it has the wind at its back to drive more growth. Florida’s population growth in recent decades appears likely to hold for the foreseeable future as more Americans are drawn to the state for a variety of reasons, including its climate and vibrant economy. The state’s population is predicted to increase by about two million people to nearly 25 million between 2024 and 2029.

Continued net migration to Florida is driving NextEra Energy’s substantial investments in expanding and modernizing infrastructure to accommodate a growing customer base. During the current four-year settlement agreement, the FPL subsidiary is expected to make more than $34 billion in capital investments. This could drive the high-single-digit annual interest rate base growth needed to push adjusted diluted earnings per share higher.

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