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Hype Asset of the Day | September 28th, 2022



NextEra Energy, Inc. (NYSE: NEE)

NextEra Energy owns Florida Power & Light Company, which is America's largest electric utility that sells more power than any other utility, providing clean, affordable, reliable electricity to approximately 5.8 million customer accounts, or more than 12 million people across Florida. Its subsidiaries include Florida Power & Light (FPL), NextEra Energy Resources (NEER), NextEra Energy Partners, Gulf Power Company, and NextEra Energy Services. Having made lots of successful deals recently, and being a dividend aristocrat, NextEra Energy has seen an increase in mentions by 74% over the last day, encouraging investors to wonder what made the company gain so much hype. Currently, shares of NextEra Energy trade at $81.08 each.


Positive Hype

With the company’s firm financial foundations, steady demand and elite returns, there are lots of reasons that NextEra generates positive hype.


  • NextEra Energy has delivered 28 straight years of dividend increases. Since 2006, the dividend has expanded at a 9.8% compound annual rate.


  • Including dividends paid, NextEra has generated a positive total return for its shareholders in 19 of the past 20 years!


  • It ended last year with a 60% dividend payout ratio, below the 65% average of its peer group, allowing it to retain more earnings for new investments. [0.854]


  • That has helped power total returns approaching 1,000% over those 15 years, almost triple those of the S&P 500.


  • NextEra is also relatively immune to fluctuations in the market because no matter how poorly the stock market performs, homeowners and renters still need electricity and gas service.


  • Another major selling point with NextEra Energy is its focus on renewable energy. Although green energy projects can be costly, they've helped NextEra reduce its electricity-generation costs and grow profits annually by a single-digit percentage for over a decade.


  • It's investing billions of dollars in expanding its Florida utility and renewable energy platform. It sees those investments powering around 10% adjusted earnings per share and operating cash flow growth through 2025. That should support about 10% annual dividend growth through 2024.

Negative Hype

NextEra has done really well for itself so far, however, no investment is ever perfect and NextEra isn’t an exception. Here’s one reason NextEra has received negative hype recently.


  • NextEra announced it had successfully raised $2 billion by selling equity units, which has left short-term investors worried because now their ownership is diluted.


Conclusion

At this point, it seems like NextEra is unstoppable with virtually no downsides right now. Assuming all goes according to plan, the company is set to continue being a dividend aristocrat and benefiting from the deals that they’ve just financed. Additionally, management expects to continue hiking the payout to shareholders consistent with a targeted (and conservative) payout ratio of 65%. With such a positive outlook and the necessary factors to back it, NextEra looks like a company you should consider taking a position in immediately.


HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.




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