Electric Utility
Today, we cannot deny the fact how an electric utility company makes the world go round. Living in the modern world, electricity is considered essential in daily living. We use electricity for lighting, heating, cooling, and refrigeration and for operating appliances, computers, electronics, machinery, and public transportation systems. In short, almost in everything.
Electric utility companies are the commercial entities responsible for providing electricity to general public and industrial consumers. They own and operate equipment and facilities for the generation, transmission, distribution of electric energy in which they sell subject to state regulation.
There is a variety of well-known electricity providers in the world. NextEra Energy (NEE) is one of the biggest electricity utility company to date. They are the world’s largest generator of solar and wind power, and 42.55% of the electricity NEE generates is clean energy.
NextEra Energy Wind Power
Wind energy or wind power, a form of solar energy, is the process by which wind is used to generate electricity. Wind turbines convert the kinetic energy in the wind into mechanical power. A generator then converts mechanical power into electricity, and it can be utilized directly for specific tasks such as pumping water.
Wind power is the cheapest way to generate electricity today. As NextEra Energy pursues to moving towards clean energy, 20 of the 47 gigawatts they produce are from wind and solar. Also, 69% of their clean energy comes from the wind.
It is because of charts like this that economics are adding up. It only shows the unsubsidized real cost of energy taking into account things such as building and maintenance cost. Investing in wind energy doesn’t only pay, but it also helps provide a cleaner world.
NextEra Energy Performance
NextEra Energy has been showing a remarkable performance throughout the years. NEE’s shares have appreciated to a great percentage of +432%. It has exceeded the SPDR Utilities Select Sector ETF’s return of +59%. In result, investors in NEE have rewarded the company’s efforts.
Over the same time frame, utilities as a sector greatly underperformed Dow Jones Industrial Average with a +138% return. Because utilities are considered a defensive sector with a lower risk, having this kind of share appreciation with lower risk assets prove good investments in this kind of business in the industry.
NextEra Energy managed to outperform technology indices with shares of +286% while paying a dividend and increasing it every year. This goes to show that their potential in creating a better performance in the future is not far at hand.
NextEra’s Fast Growing Dividend
Compared with the15 utility companies that have been running for at least 25 years already and growing their dividends by 3.8% a year on average, NextEra Energy shows a stunning growth of 9.1% dividend annually. It goes to show that NextEra Energy grows their dividend faster than the other utility companies do. NEE managed to pay a dividend and increase it annually for the last 24 years.
According to NextEra Energy investor’s presentation, the plan to increase the dividend payments are at a steeper growth rate until 2020. NEE also plans to continue rewarding their shareholders. Furthermore, based on NEE’s declared dividend of $1.11 which results in a yield of roughly 2.77%, a yield of 3.43% by 2020 will be gained if the lower end of the above statements are used.
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