In This Article:
Key Points
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NextEra Energy is a leader in all forms of clean energy.
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The company is in an excellent position to capitalize on the expected surge in power demand.
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It could continue to generate strong total returns for its shareholders.
One of the smartest things you can do as an investor is focus on megatrends that should drive above-average growth in the coming years. The top companies focused on a major growth trend tend to deliver strong earnings growth and total returns over the long term.
U.S. power demand is becoming a massive growth trend. After barely rising over the last two decades, forecasters expect electricity demand in the country to surge 55% by 2040. Several catalysts will power this acceleration, including artificial intelligence (AI) data centers, the electrification of transportation, and the onshoring of manufacturing. This catalyst drives the view that the U.S. will need to add a staggering 450 gigawatts (GW) of new power generation capacity by 2030.
NextEra Energy (NYSE: NEE) is in a strong position to capitalize on this megatrend. Here's a look at whether the utility is one of the smartest investments you can make right now.
A leader in the field
"NextEra Energy is the quintessential 'all-forms-of-energy' company," stated CEO John Ketchum on the first-quarter earnings conference call. He noted that his company knows "renewables and storage because we're a world leader in the space." NextEra also knows "gas because we operate the largest gas-fired fleet in America and have built more gas-fired generation than anyone over the last two decades," and "nuclear because we operate one of the largest fleets in the United States." Further, NextEra Energy knows "how to serve growth because we've been doing it for decades across the United States."
The company currently has 72 gigawatts of power generation capacity across the country. It's the largest electric utility in America and a leading North American clean energy company. NextEra's massive scale gives it a huge competitive advantage. Its years of experience in the development of renewable power have made it a leader in the sector. It's the No. 1 originator of renewable energy development projects among power and commercial and industrial customers, with a 20% share of the market.
The power to grow
NextEra Energy's leadership in the sector puts it in a strong position to grow its business and shareholder value in the future. The company plans to invest about $120 billion in American energy infrastructure over the next four years. It's investing that capital in renewable energy projects (more than 25 GW of projects currently in its backlog), energy transmission lines, and other energy infrastructure projects. The company expects these investments will help grow its adjusted earnings per share at or near the high end of its 6% to 8% annual target range through 2027. It will also support dividend growth of around 10% per share through at least next year.