Please ensure Javascript is enabled for purposes of website accessibility

NextEra Energy Aims to Increase Dividends 10% Per Year Through 2022

By Neha Chamaria - Apr 22, 2020 at 12:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The utility just dispelled COVID-19 fears with encouraging long-term guidance and dividend policy.

NextEra Energy (NEE 0.97%) announced its first-quarter earnings on the morning of April 22. The company reported encouraging numbers for the quarter and maintained its previous long-term outlook. Even better, NextEra Energy confirmed its commitment grow dividends despite a challenging business environment due to the ongoing COVID-19 pandemic. 

Strong earnings growth expected through 2022

After its strong showing in 2019, NextEra Energy projected its adjusted earnings per share (EPS) to grow 6% to 8% per year through 2022. The COVID-19 pandemic had fueled fears about whether the utility will still be able to meet those projections. To investors' surprise, management just dispelled all fears by reiterating the below outlook:

  • 2020: Adjusted EPS of $8.70-$9.20. It earned $8.37 per share in adjusted earnings in 2019.
  • 2021-2022: Adjusted EPS compound annual growth rate of 6% to 8%.
  • 2022: Adjusted EPS growth of 6%-8% off 2021 base, or roughly $10-$10.75 per share.
  • 2018-2022: Operating cash flow growth in line with adjusted EPS growth.

These projections are backed by NextEra Energy's strong first-quarterly performance, with its regulated utility Florida Power & Light (FPL) growing net income by 9% and Gulf Power by 8% year over year, respectively.

A rising arrow on a stack of coins depicting income growht.

Image source: Getty Images.

NextEra also advanced its capital investment projects during the quarter despite the coronavirus outbreak hiccups. FPL and Gulf Power, for instance, filed a Ten Year Site Plan with the regulatory authority to merge the two companies into a large, single utility which aims to increase electricity generated from zero-emission sources by 70% by 2029, among other things.

NextEra Energy's focus on cleaner energy sources is why it remains one of the best renewable energy stocks to buy and hold.

Dividends should keep rolling in

NextEra Energy management also updated its dividend policy and expects to grow dividends by roughly 10% per year through "at least" 2022 off its 2020 base of around $5.60 per share. In February, the company increased its dividend by 12%. That's great news for income investors.

In fact, what NextEra Energy just delivered is a win-win for both shareholders and customers: FPL and Gulf Power residential customers can expect a one-time decrease of nearly 25% and 40% in the bills as the company will pass on the benefit of lower fuel costs to customers.

That's some good news amid the COVID-19 gloom.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends NextEra Energy. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NextEra Energy, Inc. Stock Quote
NextEra Energy, Inc.
NEE
$89.78 (0.97%) $0.86

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
373%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.