This elite dividend stock continues to experience incredible growth

The energy of the next era (FROM HOME -0.16%) was growing at a breakneck pace for a public utility. It has generated 9% adjusted annual earnings per share growth over the last decade. This gave it the opportunity to increase its dividend at a compound annual rate of 10%. NextEra has raised its payout every year for three decades, one of the longest streaks in the industry. The company’s rapidly growing earnings and dividend have generated tremendous total returns over the past 20 years (over 1,700% compared to around 600% for S&P500 and over 500% for other utility companies).

The company expects to continue to deliver strong growth in the coming years. For this reason it remains excellent dividend stocks that you can buy and hold for the long term.

Expanding your perspective

NextEra Energy has good visibility into its future growth prospects. The electrical plant AND renewable energy producer generates Very stable cash flows backed by long-term contracts and government-regulated interest rate structures. Meanwhile, his energy company operates in Florida, which benefits from plenty of sunshine (Great for the production solar energy) and above-average population growth. Moreover, its energy resources segment, leader in produce and the development of renewable energy, benefits from growing demand.

These factors have led the company to believe it should be able to grow its adjusted earnings by 6% to 8% annually through 2026 despite headwinds from higher interest rates. This Lately extended that outlook by one year, now forecasting adjusted earnings per share growth of 6% to 8% annually through at least 2027. NextEra’s management team said it would be disappointed if it did not deliver growth at or near its target range. Business Also expects to raise its dividend by approximately 10% annually through 2026.

NextEra Energy has already provided much of that growth. The company’s Energy Resources segment has a backlog of 21.5 gigawatts (GW) of renewables and storage projects. This is a huge number of projects, considering that the segment currently has 34 GW of operational capacity. Moreover, it has another 300 GW under development. The company recently agreed accelerating the development of projects with a capacity of up to 4.5 GW over the next five years in a contract with another public utility company Entergia.

It is a powerful new growth factor emerging

In the longer term, the value of utilities may grow even faster. He expects U.S. energy demand to increase 40% over the next two decades. This is a significant acceleration compared to the 9% increase in demand over the last 20 years. Several factors power This supercharged growth prospects, including growing demand from technology companies for electricity for data centers needed for artificial intelligence, growing domestic manufacturing and electric vehicles.

Technology companies need a staggering amount of energy to power data centers where artificial intelligence (AI) applications run. This prompts them to secure long-term contracts for the supply of energy to their facilities. For example, Microsoft recently signed a five-year contract with Brookfield Renewable develop a staggering 10.5 GW of power. That’s almost eight times more than the largest energy contract ever signed by a corporation.

They are also asking for NextEra’s help in finding locations that will meet their energy needs. The company’s CEO, John Ketchum, recently stated that it had been approached by companies for locations to handle 5 GW of capacity. He emphasized that this is the size of the energy needs of a city like Miami.

The expected increase in energy demand could allow NextEra and other utilities to restart older nuclear plants. For example, NextEra closed the Duane Arnold Nuclear Power Plant in Iowa in 2020 after its largest customer did not renew its contract. The company could restart the 600-MW reactor to help power data centers.

These drivers could power above-average increase in the company’s profits for the coming years. That could give this is the fuel to continue to grow the dividend at a tremendous pace.

Supercharged returns should To continue

NextEra Energy has grown much faster than U.S. energy demand over the past year 20 years due to its focus on Florida and renewable energy. This strategy should continue to pay off in the futureespecially given the expected acceleration in electricity demand. This should enable the company to continue to grow profits and dividends at an above-average level, what should give it is fuel to produce strong total phrases. This revenue and growth potential is what makes NextEra Energy Excellent stocks that you can buy and hold for the long term.