NextEra Energy (NEE 2.39%) has delivered powerful growth over the years. The utility's adjusted earnings per share have grown at a 10% compound annual rate over the last decade, the highest among the top 10 power producers. That has helped power 9.8% compound annual growth in its dividends since 2006 and enabled it to deliver market-crushing total returns of 528% over the last decade (versus 227% for the S&P 500).
The clean energy-focused utility expects to continue delivering outsize earnings and dividend growth in the coming years. That could give it the power to continue producing market-beating total returns.
Capping off a great year
NextEra Energy recently reported its fourth-quarter results. While some of the company's numbers were below analysts' expectations, it was still a solid quarter to cap an excellent year. The utility's adjusted earnings grew by 24.4% to $0.51 per share, pushing its full-year total to $2.90 a share, 13.7% above 2021's total. The company benefited from solid results across its portfolio. It also got a boost from the more than $19 billion it invested into its infrastructure, allowing it to commission 5 gigawatts (GW) of new renewable energy and storage capacity.
The company also continued to secure new investments. It added 8 GW of renewable energy and storage projects to its backlog in 2022, including 1.7 GW since its last quarterly conference call. That was its best-ever year for securing new projects. Its backlog now stands at 19 GW, giving it enhanced visibility into its future growth.
The visibility to continue growing
NextEra Energy's growing backlog and increasing visibility into future projects give it more confidence in its growth potential. The company noted that the recently passed Inflation Reduction Act gives the energy industry more than two decades of visibility into clean energy incentives. Because of that, the company is confident that it can continue securing new expansion projects and growing at an attractive rate. NextEra Energy now believes it can complete 32.7 to 41.8 GW of new renewable energy and storage capacity through 2026. As a result, it's extending its current growth forecast for another year, stretching it into 2026:
Image source: NextEra Energy Investor Relations Presentation.
The company's existing expansion project backlog has it on track to grow its earnings by about 14% from last year's level to the midpoint of its 2024 range, or by about 7% annually. Meanwhile, it anticipates growing its adjusted earnings per share at a 6% to 8% annual rate through 2026, a year longer than its prior forecast. As the company notes, it's aiming to deliver growth toward the high end of its projections.
The utility has a top-notch balance sheet to finance its continued expansion. That also gives it the flexibility to make acquisitions as opportunities arise. Future accretive deals could help power growth above its forecast range.
NextEra's outlook and financial strength give it the confidence to continue growing its dividend at a healthy rate. With shares under pressure over the past year, the dividend yield is now almost 2.2%, putting it further above the S&P 500's 1.7% current yield. That yield will be even higher as it continues increasing its dividend.
A great growth stock for the long term
NextEra Energy isn't like other utilities. It's growing much faster than its rivals, which should continue for the next several years. That should enable it to keep pushing the dividend higher. These growth drivers could give it the power to produce market-beating total returns over the next several years. This upside potential makes it a great growth stock to own for the long haul.
