Many people find the idea of nuclear energy unsettling. It could be an association with atomic weapons or memories of the infamous disaster in Chernobyl. However, today's nuclear power generation is clean, efficient, and safe.
Simply put, nuclear energy involves controlled fission reactions (splitting atoms) to generate heat that turns massive steam turbines to generate electricity. Soaring energy demands in the United States have driven significant interest and planned investments in nuclear energy over the coming decades.
Constellation Energy (CEG 2.35%) has a leg up in the U.S. nuclear industry. Here is why its stock could power your retirement with dividend income for decades to come.
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Constellation Energy has a head start in a booming nuclear opportunity
The demand for nuclear energy is soaring. President Donald Trump signed executive orders setting a target for electricity production capacity of 400 gigawatts (GW) by 2050 -- nearly 4 times current levels -- and to begin construction on 10 new large reactors and 5 GW worth of capacity upgrades to existing facilities by 2030.
Unfortunately, you can't just pop up a nuclear reactor anywhere. There is a ton of regulation, time, and cost involved.
Constellation is the largest producer of carbon-free energy in the United States. Its leading fleet of nuclear power facilities is a big reason for that. Currently, the company's nuclear assets have a combined capacity of 22.1 GW, more than twice that of its closest competitor.
That leadership could give it an edge in navigating regulatory red tape and executing new construction and upgrades. Constellation has already struck deals with two leading artificial intelligence (AI) companies. It is restarting a reactor at its Three Mile Island plant to supply power to Microsoft on a 20-year agreement. It has a similar deal with Meta Platforms for power from its Clinton Clean Energy Center in Illinois.
NASDAQ: CEG
Key Data Points
Constellation Energy's dividend is nothing to scoff at
I'll admit, Constellation Energy's dividend isn't likely to excite many income-hungry investors. The stock yields just over 0.5%. But when you're thinking in terms of decades, the dividend's future upside means far more than its starting yield.
Constellation Energy's dividend payout ratio is only 17% of full-year 2025 earnings estimates, and analysts anticipate the company will grow its earnings per share by 15% annually over the next three to five years. That means Constellation Energy could raise its dividend at a double-digit rate for the foreseeable future without drastically stretching the payout ratio.
If the company can sustain at least solid dividend growth over a multidecade holding period, those dividends can turn from snowflakes into an avalanche of income by retirement. Look for Constellation Energy to become one of the hottest dividend growers on the market over the coming years.
