Forget NextEra Energy. Buy This Magnificent Dividend King Instead
NextEra Energy (NYSE: NEE) is one of the largest utility stocks you can buy, with a huge $150 billion market cap. But that market cap is really a function of the stock's popularity on Wall Street, which has left it with a somewhat miserly dividend yield of 2.8%. The average utility's yield is 3%, using Utilities Select Sector SPDR ETF as an industry proxy. You can do better than that if you want to maximize the passive income your portfolio generates. And you can do it with a Dividend King utility!
In no way should investors think that NextEra Energy is a bad company. Quite the contrary, it is probably one of the best-run utilities you can buy. The problem is that this fact is fairly well known. For years, NextEra Energy has grown its business rapidly using a two-pronged approach, mixing a regulated utility (Florida Power Light) and a renewable-power business. The regulated utility is the foundation, while the clean energy operation is the growth engine.
The real attraction here isn't the yield; it's the growth. That's shown up most notably on the dividend front, with a 10-year annualized dividend-increase rate of roughly 10%. That's good for any company but pretty incredible for a utility. Half that rate would be a good number for the slow and steady utility sector. If you are a dividend-growth investor or a growth and income investor, NextEra Energy should probably be on your short list. But income investors will be better off looking elsewhere for yield.
Source Fool.com
