NextEra Energy (NYSE: NEE) has increased its dividend annually for 31 consecutive years. That’s not the longest streak in the utility sector, but it is a pretty impressive accomplishment just the same. The dividend yield is an attractive 2.8%, which is well above the roughly 1% on offer from the S&P 500 index (SNPINDEX: ^GSPC). But the big story here is that NextEra Energy doesn’t plan to change its dividend policy after it buys peer Dominion Energy (NYSE: D). If you are interested in nuclear power, you should do a deep dive on NextEra Energy today. Here’s a primer.
What does $1,000 get you?
If you are just looking at the stock, a $1,000 investment will buy you 11 shares of NextEra Energy. That gets you in on the 2.8% yield backed by a steadily growing dividend. But you are really buying a business, and that business is highly attractive. On the nuclear front, the acquisition of Dominion will make NextEra the second-largest nuclear energy company in North America. That’s very good, noting that nuclear power is increasingly being looked to as a reliable, clean energy source. With electricity demand expected to increase by 60% between 2025 and 2045, NextEra will be well-positioned.
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That said, being number two in nuclear is just a small part of the story. NextEra is already the world’s largest utility by market cap. It will be even bigger after the deal is consummated, giving it even greater access to the capital markets. And it will be the number one in total generation, renewable generation, gas generation, and battery storage, as well. You may buy NextEra Energy for its nuclear position, but you are also getting an industry-dominant business.
There’s no reason to believe that NextEra Energy’s dividend streak is at risk. And, in fact, the company actually expects the Dominion acquisition to improve its earnings growth outlook. So, future dividend growth looks even more secure than before the deal was announced. A $1,000 investment here could lead to a lifetime of reliable, growing dividends.
The deal isn’t done yet
The one problem with the nuclear piece of this puzzle is that NextEra Energy hasn’t yet completed its acquisition of Dominion Energy. Given NextEra Energy’s size, regulators are likely to closely scrutinize the transaction. That’s reasonable, but it means buying NextEra Energy now is a bet that the deal will go through. That’s not exactly a risky bet, but you need to know you are taking on that risk before you jump aboard this soon-to-be nuclear giant.
