NextEra Energy Vs. XLU: Yield Spread Favors Buying NEE

(11min)

Summary

  • Since my last writing, the XLU-NEE yield spread has plunged to the lowest level in at least a decade.
  • This indicates that NEE’s valuation risk is extremely low compared to the broader utility sector.
  • I am optimistic for NEE to sustain ~10% annual dividend growth rate given its past dividend growth record and the guidance provided in its Q1 earnings report.
  • Despite its better – much better - dividend consistency and growth potential, NEE is currently priced at almost identical valuation ratios as XLU.
  • I do much more than just articles at Envision Early Retirement: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

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NoDerog

NEE Q1 earnings and XLU: chart of the day

I last analyzed NextEra Energy (NYSE:NEE) on Feb 9, 2025 with a HOLD thesis. That article was titled "NextEra Energy: Yield Spread Shows It's Still A Hold”. The hold

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This article was written by

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Envision Research, aka Lucas Ma, has over 20+ years of investment experience and holds a Masters with in Quantitative Investment and a PhD in Mechanical Engineering with a focus on renewable energy, both from Stanford University. He also has 30+ years of hands-on experience in high-tech R&D and consulting, housing sector, credit sector, and actual portfolio management.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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