This Solar Energy Stock is Rising As Oil Tops $100 Per Barrel
Geopolitical conflict in the Middle East has created significant uncertainty in energy markets. Oil prices are hovering near $100 per barrel as investor sentiment swings with news from the conflict region. If you are looking for a safe haven, NextEra Energy (NEE 1.58%) might be a good place to hide. Here’s why.
NextEra’s foundation is reliable in good times and bad
NextEra Energy’s business has two sides. One is its regulated utility operation, which owns Florida Power & Light. It ranks among the largest electric utilities in the United States. Regulated utilities are granted monopolies in the regions they serve but must get their rates and capital investment plans approved by the government. This generally means that they operate outside of the normal Wall Street cycle.
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Slow and steady growth is the normal outcome of this arrangement as regulators try to balance reliability, cost, and investor returns. This is a solid core for investors seeking a safe-haven investment in turbulent times. Notably, NextEra Energy’s dividend yield is 2.6%, which is well above the 1.1% offered by the S&P 500 index (^GSPC 1.01%) and the 2.4% of the average utility. That may be too low for some dividend investors, but it is clearly attractive on a relative basis.
NextEra’s growth engine is clean energy
In addition to its regulated utility, NextEra Energy has built one of the world’s largest solar and wind power producers. This is the business that has been the company’s growth driver, helping push the dividend higher regularly at an attractive rate. Looking forward, management expects the dividend to grow at a 6% clip through 2028, backed by earnings growth that is targeted to be roughly 8% a year through 2035.
Today’s Change
(-1.58%) $-1.46
Current Price
$91.07
Key Data Points
Market Cap
$193B
Day’s Range
$90.61 - $92.47
52wk Range
$61.72 - $95.91
Volume
141K
Avg Vol
9.7M
Gross Margin
36.20%
Dividend Yield
2.51%
The key is that NextEra Energy is building clean energy assets, such as solar power, and signing long-term supply agreements with customers. This creates a very stable income stream that should hold up regardless of economic or market swings, just like the core utility business. NextEra Energy is a bit boring, but boring can be a good thing during difficult times.
NextEra Energy could be a foundational investment
If you are concerned about the impact rising oil prices will have on your portfolio, it may be time to consider investments known as safe-haven assets. Utilities are a good starting point, with solar and wind giant NextEra Energy offering a safe haven and growth opportunities in one high-yield package.