NextEra Energy Falls After Q3 Earnings Report: What Investors Need to Know | Colorful fool

Actions from NextEra Energy (NEE +1.17%) are down from their recent 52-week high in October after the company reported third-quarter earnings on Oct. 28. Despite a 31% rise in quarterly earnings and a 5.3% rise in revenue, the stock sold off as Wall Street took a dim view of revenue falling $200 million below expectations to $7.97 billion.

Today’s Change

(1.17%$0.99

Current price

$85.76

Key data points

Market capitalization

179 billion dollars

Daily range

$84.55 -$85.83

Range 52 weeks

$61.72 -$87.53

Volume

12 million

Avg. flight

10 million

Gross margin

36.09%

Dividend yield

0.03%

Nevertheless, from the new partnership with Alphabet with expectations for a 10% dividend increase next year, long-term investors have good reason to be bullish on NextEra. The $170 billion energy company, which powers roughly 12 million people through its wind, solar, nuclear and natural gas operations, is positioned to thrive in a period of increased energy needs that its CEO calls the “golden age of energy demand.”

The dividend delivers a must-have product

NextEra has raised its dividend every year since 1994, including a 10% increase in February 2025 following an identical 10% increase in 2024. Overall, the company has increased its dividend by 62% since 2020, easily outpacing the 25% inflation seen over that time frame.

NextEra’s dividend is up 966% since 1994. Anyone who invested $1,000 in NextEra exactly 31 years ago today would be receiving $1,430 in dividends each year, with capital appreciation of over 5,000%.

Unfortunately, these gains are a thing of the past. In addition to maintaining strong, inflation-crushing dividend growth in recent years, NextEra is showing other signs that it can continue.

The company’s subsidiary, Florida Power & Light, is America’s largest electric utility, supplying power to 12 million Floridians. This has impressively reduced household energy bills by 20% compared to 20 years ago, adjusted for inflation. It has achieved this success because its operating and administrative costs are 70% lower than the national average for utilities and 50% lower than its nearest competitor.

Electricity is a necessary household product; that’s why NextEra was able to increase operating income by 7.5% in 2008, even during the worst financial crisis since the Great Depression. This is also why the stock has a beta of only 0.74, indicating much lower volatility than the overall markets (a beta of less than 1 means the stock is less volatile than a stock market beta of 1, while a beta of more than 1 means higher than average volatility).

Given its fundamentals, management appears highly likely to meet its plan to raise the dividend another 10% in early 2026. That would put the company at a dividend yield of over 3%, well above the S&P 500 average of 1.14%.

Then there are the moves the company is making in growth sectors, starting with a partnership with Alphabet to help the tech giant meet its massive energy needs in the age of artificial intelligence (AI).

Artificial intelligence consumes as much energy as the nation of Japan each year

According to the International Energy Agency, by 2030 energy-intensive AI data centers will consume as much energy each year as all of Japan, a nation of 125 million people.

That’s why OpenAI CEO Sam Altman called for an “energy breakthrough” to meet the massive energy demand…and why NextEra CEO John Ketchum called the setup “the golden age of energy demand” in his Q3 earnings call.

This represents huge potential for NextEra, which is once again the largest electricity provider in the United States. And with nuclear power now in Washington’s favor (President Donald Trump signed an executive order to quadruple America’s nuclear power generation), NextEra’s partnership with Alphabet to restart the Duane Arnold nuclear power plant in Palo, Iowa, by early 2029 is a big deal. The 615-megawatt plant would supply enough electricity to power hundreds of thousands of homes annually and is expected to add $0.16 to NextEra’s earnings per share each year.

For context, NextEra reported adjusted earnings of $1.13 per share last quarter, so another $0.04 for the quarter would be meaningful, but not a huge increase. But Duane Arnold is just one project in the company; its 20-gigawatt pipeline of projects on board would provide enough power for 15 million homes.

Despite this setup, as we enter the “golden age of demand for power,” NextEra stock is still cheap, with a price-to-earnings ratio of 26, below the S&P 500 average of 32. For investors looking for value, growth and, above all, income, NextEra Energy stock is a buy.