Shares of NextEra Energy (NEE 0.47%) have fallen 12% over the past year. That has significantly underperformed the S&P 500, which has rallied 20% during that period. The decline in NextEra's share price has pushed its dividend yield well over 3%, more than double the S&P 500's 1.2% yield.
Here's why investors should buy the dip in this excellent energy stock.
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The high-powered growth continues
There's no reason for NextEra Energy's stock to have slumped in the past year. The electric utility is growing briskly, delivering 9.4% adjusted earnings-per-share growth in the second quarter. It remains on track to achieve its full-year earnings forecast.
The company also expects to deliver on its long-term outlook of growing adjusted earnings per share by 6% to 8% annually through 2027, compared to last year's baseline. NextEra CEO John Ketchum has repeatedly reiterated that the company would be "disappointed if we are not able to deliver financial results at or near the top of our adjusted earnings per share expectations ranges in each year through 2027." That growth outlook supports NextEra's plan to increase its dividend by around 10% annually through at least next year.
Meanwhile, the company's long-term growth outlook is as bright as ever. Forecasters anticipate a significant acceleration in power demand in the coming years, driven by the growth of AI data centers, the electrification of transportation, and the onshoring of manufacturing. This will power robust demand for renewable energy. As a leader in renewable energy development, NextEra Energy stands to benefit from this megatrend.
A great buy right now
Given its attractive dividend, visible near-term growth prospects, and exposure to rising power demand, NextEra Energy's lower share price looks like a great opportunity to buy.
