NextEra vs WEC Energy: Which Utility Stock to Choose?

The comparison between NextEra Energy and WEC Energy reveals insights into their dividend yields and growth strategies, showcasing WEC as a more attractive option for income-focused investors.

Date: 07-09-2024

AI Rating: 7

NextEra Energy (NYSE: NEE) is recognized as a well-run company with a strong track record of annual dividend growth of around 10% over the past decade. This growth is attributed to a solid regulated utility core and a renewable power operation. Despite these positive aspects, the current pricing of NextEra Energy reflects its successes, resulting in a relatively low dividend yield of 2.6% compared to the average utility sector yield of around 3%.

On the other hand, WEC Energy (NYSE: WEC) presents a more appealing option for income-focused investors, offering a higher dividend yield of 3.6%. WEC Energy has also consistently increased dividends annually for two decades, although its average increase of 7% over the past decade is slightly behind NextEra Energy's. WEC's substantial capital expenditure plans of $23.7 billion are expected to push earnings higher by 6.5% to 7% annually through 2028, indicating solid earnings growth potential.

The analysis indicates that while both companies are strong utility players, WEC Energy's superior starting yield and solid earnings growth prospects position it as a more attractive alternative for investors seeking a balance of income and growth. The evaluation of these two companies underscores the importance of considering not just growth but also valuation and income yield in stock selection.

Stocks: NEE WEC