NextEra Energy’s Remarkable Dividend Growth in Utility Sector

Reuben Gregg Brewer (NextEra Energy): Within the utility sector, NextEra Energy has often lagged in terms of dividend yield. Currently, with a yield of 3.6%, it hovers around the industry average, benchmarked against the Vanguard Utilities ETF. Nonetheless, this represents one of the highest yields the stock has presented in a decade, indicating an opportune moment to invest in this company.

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NextEra Energy operates as a blend of a stable regulated utility (primarily Florida Power & Light) and a swiftly expanding renewable power unit (famously one of the top solar and wind power producers globally). This juxtaposition has enabled NextEra Energy to boost its dividend at an annualized rate of 10% over the past ten years. Even half of this growth rate would be considered commendable within the realm of utilities. In essence, NextEra Energy presents a rare opportunity for dividend growth within a typically staid sector.

This bodes well for dividend growth investors. With its historically high yield, NextEra Energy can enhance portfolio diversification for investors lacking exposure to the utility segment. Anticipated robust 10% dividend growth in 2024 (a trend expected to continue through 2026) aligns with the company’s projection of solid earnings growth (6% to 8% annually) until at least 2026. In essence, the future outlook remains bright. Consider this a chance to acquire a top-notch dividend-growth utility at an enticing valuation – an opportunity not to be missed.

Potential for Robust Dividend Growth Ahead for Clearway Energy

Matt DiLallo (Clearway Energy): Clearway Energy ranks among the largest renewable energy producers in the U.S. It also manages a portfolio of environmentally sustainable natural gas power plants. The company’s clean energy assets generate consistent cash flow, underpinned by fixed-rate power purchase agreements with utilities and major corporate buyers.

Fueled by a capital recycling strategy, Clearway divested its thermal assets in 2022, garnering approximately $1.3 billion in cash proceeds. It has since been channeling these funds into higher-return renewable energy ventures. Last year, it committed $215 million to wind, solar, storage, and wind repowering projects slated to commence power generation and cash flow this year. Concurrently, potential deals are in sight to reinvest the remaining proceeds into lucrative renewable projects, paving the way for an upsurge in cash available for dividends from $342 million in the prior year to $435 million in the foreseeable future.

The company is gaining clearer visibility into post-2026 growth prospects. Recent contract renewal rates for several natural gas power plants suggest potential to support the lower end of its dividend growth target range in 2027. With mounting demand for renewable energy, a profusion of fresh investment opportunities is expected. Its parent entity boasts a robust project pipeline presently under development. Clearway is primed to capitalize on repowering existing wind farms and expanding battery storage capacity.

Trading 30% lower over the past year owing to rising interest rates, Clearway presents ample room for growth fueled by the renewable energy megatrend, making it a compelling long-term investment at the moment.

Encouraging Signs for Ford Motor Company

Neha Chamaria (Ford Motor): Ford shares have surged by nearly 19% in the last quarter prior to this coverage, indicating the potential commencement of a bullish streak for the automaker considering recent developments.

Ford recently disclosed robust figures for both its fourth quarter and full-year 2023 performance. Despite encountering macroeconomic headwinds and internal obstacles like labor disruptions,

Ford Revs Up Revenue Growth for 2023, Eyes Profit Surge in 2024

Ford’s Financial Triumph in 2023

With the speed and agility of a veteran racecar driver, Ford hit the gas pedal on revenue growth, accelerating by an impressive 11% in 2023. This surge in performance catapulted the automaker to a net profit of $4.3 billion, leaving behind the haze of a net loss of $2 billion in 2022. Purring like a well-oiled engine, Ford also revved up its adjusted free cash flow (FCF) to $6.8 billion, surpassing its own guidance range of $5 billion to $5.5 billion. The cherry on top? Ford declared a supplementary dividend for the first quarter, signaling to investors that sunny skies lay ahead.

Cost-Cutting and Strategic Moves

Amidst the roar of demand roaring like a V8 engine, Ford deftly cut costs and tightened its belt on capital spending in slower markets to supercharge its overall profit margins and returns in 2023. Yet, Ford made a surprising pit stop: the company is stepping off the accelerator on spending for electric vehicles to navigate the global slowdown and concentrate on more lucrative ventures. Ford’s strategic pivot sees a refocus on its cash cow – Ford Pro, the commercial vehicles segment that churns out steady revenue streams. The forecast for 2024? Ford anticipates hitting the sweet spot with adjusted earnings before interest and taxes (EBIT) ranging from $10 billion to $12 billion, compared to $10.4 billion in 2023, with adjusted FCF cruising in the range of $6 billion to $7 billion. Moreover, Ford is committed to steering 40% to 50% of adjusted FCF right back to shareholders in the form of dividends, offering investors a compelling ride.

Accelerating Into 2024

Revving its engines for 2024, Ford has a turbocharged lineup of product launches, including an upcoming model of its all-star pickup truck, the F-150. With these stellar growth prospects in the rearview mirror, Ford emerges as a sturdy stock pick for investors eyeing long-term success in 2024 and beyond, offering a highway paved with promise.