Important news for shareholders and potential investors in NextEra Energy Inc (NYSE:NEE): The dividend payment of $1.11 per share will be distributed into shareholder on 15 June 2018, and the stock will begin trading ex-dividend at an earlier date, 04 June 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at NextEra Energy’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for NextEra Energy
5 questions to ask before buying a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it paying an annual yield above 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Is it able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does NextEra Energy pass our checks?
The current trailing twelve-month payout ratio for the stock is 23.17%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 61.81%, leading to a dividend yield of around 3.04%. However, EPS is forecasted to fall to $7.91 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of NEE it has increased its DPS from $1.78 to $4.44 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. In terms of its peers, NextEra Energy produces a yield of 2.69%, which is on the low-side for Electric Utilities stocks.
Taking into account the dividend metrics, NextEra Energy ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three important factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for NEE’s future growth? Take a look at our free research report of analyst consensus for NEE’s outlook.
- Valuation: What is NEE worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether NEE is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.