April 30, 2025 a 03:31 pm
NEE: Dividend Analysis - NextEra Energy, Inc.
NextEra Energy, Inc. (NEE) is recognized for its significant presence in the utility sector. Its lengthy dividend history and recent financial performance indicate both a commitment to shareholder returns and robust operational fundamentals. However, the relatively high payout ratios and leverage levels necessitate a cautious evaluation of its future financial flexibility.
📊 Overview
NextEra Energy operates within the utility sector, offering a stable and dependable dividend yield at 3.01%. Over 44 continuous years of dividend history signifies a robust commitment towards shareholders, although recent payouts suggest watchfulness against potential financial stress.
| Key Metrics | Values |
|---|---|
| Sector | Utility |
| Current Dividend Yield | 3.01% |
| Current Dividend per Share | $2.06 |
| Dividend History | 44 years |
| Last Cut or Suspension | None |
🗣️ Dividend History
The 44-year history of dividends underscores the reliability of NextEra Energy's payments to shareholders. Understanding historical trends is crucial as they reflect the company’s financial health and operational strategy. The lack of recent cuts is promising, though careful attention to high payout ratios is warranted.
| Year | Dividend per Share |
|---|---|
| 2025 | $0.5665 |
| 2024 | $2.0600 |
| 2023 | $1.8700 |
| 2022 | $1.7000 |
| 2021 | $1.5400 |
📈 Dividend Growth
Analysis of the dividend growth rate is vital for projecting future income. Over the last three years, dividends grew moderately at 10.18%, mirroring its five-year CAGR of 10.51%, reflecting consistent increases in shareholder value.
| Time | Growth |
|---|---|
| 3 years | 10.18% |
| 5 years | 10.51% |
The average dividend growth is 10.51% over 5 years, showing moderate but steady dividend growth.
📉 Payout Ratio
Payout ratios monitor the sustainability of dividends, with EPS-based payouts of 76.86% suggesting that the company directs a significant portion of its earnings towards dividends, while the free cash flow basis at 96.22% indicates a potential strain on sustaining future increases unless earnings improve.
| Key Figure Ratio | Value |
|---|---|
| EPS-based | 76.86% |
| Free cash flow-based | 96.22% |
These payouts highlight a dependency on strong earnings and cash flows to maintain current dividend levels.
✅ Cashflow & Capital Efficiency
Stable free cash flows and efficient capital usage are crucial for dividend reliability. Decomposing the cash flow yields and capital allocation ratios provides insight into NextEra's financial agility and its ability to sustain shareholder returns long term.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 3.22% | 1.42% | -0.90% |
| Earnings Yield | 4.71% | 5.94% | 1.97% |
| CAPEX to Operating Cash Flow | 65.99% | 84.49% | 117.91% |
| Stock-based Compensation to Revenue | 0% | 0% | 0.68% |
| Free Cash Flow / Operating Cash Flow Ratio | 35.79% | 15.51% | -17.91% |
The negative FCF yield in 2022 suggests challenges in maintaining dividend payouts without improved cash flow performance.
⚠️ Balance Sheet & Leverage Analysis
Assessing leverage ratios and liquidity metrics helps understand the financial solvency of the company. NextEra shows a high dependency on leverage, impacting its financial flexibility.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.20 | 1.54 | 1.66 |
| Debt-to-Assets | 0.0523 | 0.4125 | 0.4088 |
| Debt-to-Capital | 0.166 | 0.607 | 0.624 |
| Net Debt to EBITDA | 0.73 | 4.21 | 6.12 |
| Current Ratio | 0.55 | 0.00 | 0.00 |
| Quick Ratio | 0.38 | 0.47 | 0.43 |
| Financial Leverage | 3.80 | 3.74 | 4.05 |
The increasing leverage ratios suggest reliance on debt, potentially risking financial instability.
🗣️ Fundamental Strength & Profitability
Evaluating profitability and fundamental metrics is essential for assessing NextEra's capability to generate sustainable growth. Despite healthy margins, focusing on returns offers insights into operational efficiency.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 13.86% | 15.40% | 8.27% |
| Return on Assets | 3.65% | 4.12% | 2.04% |
| Margins: Net | 28.06% | 26.00% | 15.49% |
| Margins: EBIT | 33.42% | 37.75% | 21.08% |
| Margins: EBITDA | 56.69% | 59.63% | 49.43% |
| Margins: Gross | 60.06% | 63.94% | 48.38% |
| R&D to Revenue | 0% | 0% | 0% |
The strength in returns and profitability margins supports growth, albeit with attention to how external variables like debt might impact long-term returns.
Price Development
🎯 Dividend Scoring System
| Criteria | Description | Score |
|---|---|---|
| Dividend Yield | Moderate and stable | 3/5 |
| Dividend Stability | Long history of payments | 5/5 |
| Dividend Growth | Consistent growth | 4/5 |
| Payout Ratio | High EPS and FCF payout | 2/5 |
| Financial Stability | Leverage risk present | 2/5 |
| Dividend Continuity | Reliable distribution history | 5/5 |
| Cashflow Coverage | Free cash flow concerns | 2/5 |
| Balance Sheet Quality | High gearing ratios | 2/5 |
Total Score: 25/40
Rating
The dividend health of NextEra Energy hints at a robust historical framework which is tempered by current payout and leverage ratios. Investors might find reassurance in the company's longstanding track record; however, attention to financial flexibility remains crucial, advising continued vigilance in the utility contexts marked by capital intensity.