With 2013 here, now is the perfect time to examine how your portfolio picks played out in 2012. In this year-in-review, we'll examine NextEra Energy's (NEE 0.34%) stock, dividend, fundamentals, and any big announcements from 2012. Arm yourself with this top-level analysis, and you'll be well on your way to a truly happy new year.
Stock and dividend
In a rare instance for utilities, NextEra's stock managed to rake in a 19% return for investors. That's 18 percentage points above the Dow Jones Utilities Index and a solid five percentage points above the S&P 500 (^GSPC -0.22%).
NextEra's dividend hasn't fared quite as well. Its 3.7% yield dropped to 3.4% by the end of 2013, a solid 0.6 percentage points below the industry average. But NextEra's cash dividend payout ratio paints a rosier picture.
NEE Dividend Yield data by YCharts
Its dividend quails in comparison to competitors', but could be more sustainable despite its current negative cash flow. Companies like Dominion Resources (D 0.52%) and First Energy (FE 0.48%) suffer from negative cash flow and high payout ratios, calling into question the long-term viability of their dividends. Southern Company (SO 1.10%) boasts positive cash flow, but is still doling out 855% of its distributable cash to cover its dividend payments. Exelon (EXC 0.71%), Consolidated Edison (ED 0.63%), and National Grid (NGG 1.32%) are all paying out more than they can afford in the long term, but their dividends are more reasonable and all three companies have positive cash flow. Atlantic Power (AT) and NextEra both suffer from negative cash flow, but their payouts are more in proportion with their dividends than most other companies.
|
Company |
Dividend Yield |
Cash Dividend Payout Ratio TTM |
|---|---|---|
|
Atlantic Power |
9.6% |
(54%) |
|
Exelon |
7.1% |
123% |
|
First Energy |
5.3% |
(1,770%) |
|
Duke Energy |
4.7% |
(252%) |
|
Southern Company |
4.5% |
855% |
|
Consolidated Edison |
4.3% |
163% |
|
Dominion Resources |
4.1% |
(1,769%) |
|
National Grid |
4.0% |
163% |
|
NextEra Energy |
3.4% |
(27%) |
Source: YCharts and Yahoo! Finance; TTM = trailing 12 months.
Fundamentals
2012 brought in steady sales and slightly falling income. Net income rose sharply in the two years preceding, but has tapered out as the utility bumped up capital expenditures for maintenance and expansion purposes.
NEE Revenue Annual data by YCharts
While one-time expenses and sales can skew dollar data, margins provide a better look into management efficiency. For 2012, NextEra continued to expand both gross profit operating margins. Compared to utilities' 44.1% average gross profit margin, NextEra's ahead of the bell curve.
EXC Gross Profit Margin Quarterly data by YCharts
The green machine
NextEra has earned its title as the largest renewable energy producer in the United States, but its status comes with unique challenges. NextEra's wind investments just got another boost thanks to Congress' production tax credit extension, but any political maneuvering away from wind could kill its cost-competitiveness. Plus, if Congress goes through with plans to give renewables the same sort of tax breaks as oil companies, NextEra could become an even wealthier windmill.
NextEra's balancing its new wind farms with natural gas expansions, but this carries its own political risks, despite its cheap power production.
Source: NextEra 10-K
Foolish bottom line
NextEra's 2012 saw steady sales, excellent profit margins, a solid but small dividend, and a continued push into wind and natural gas. If you can bear the politicization of renewables and don't mind the dinky dividend in return for long-term-growth prospects, NextEra could be your pick for 2013.
