Investors seeking substantial profit escalation over a span of years would be wise to hone in on companies poised for earnings ascension.
NextEra Energy (NYSE: NEE), Clearway Energy (NYSE: CWEN)(NYSE: CWEN.A), and Ford (NYSE: F) are currently catching the discerning eyes of a few Fool.com analysts due to their promising growth trajectories that extend into the foreseeable future.
NextEra Energy’s Resilient Dividend Growth
Reuben Gregg Brewer (NextEra Energy): Within the utility sector, NextEra Energy typically lags behind its peers in dividend yield. Presently at 3.6%, the yield falls within an average range for the sector. Nonetheless, this figure is presently among the highest yield offerings from the stock in a decade, indicative of its current undervaluation. This presents investors with an opportune moment to seize.
NextEra Energy marries the stability of a regulated utility (primarily Florida Power & Light) with a rapidly growing renewable power segment (a leading solar and wind power producer globally). This unique blend has enabled NextEra Energy to hike its dividends at a 10% annualized rate over the past decade, a remarkable feat within the typically subdued utility realm. This robust dividend growth bodes well for income investors, offering diversification in portfolios that may lack exposure to utilities. Another year of significant 10% dividend growth awaits in 2024 (a pace expected to extend till 2026), coupled with firm earnings growth projections (6% to 8% yearly) through at least 2026. In essence, the future looks exceedingly bright. An excellent opportunity presents itself to acquire a top-tier dividend growth utility at a highly appealing valuation – a proposition not to be overlooked.
Clearway Energy’s Energizing Dividends in the Offing
Matt DiLallo (Clearway Energy): Renowned for its status as one of the premier renewable energy generators in the nation, Clearway Energy also manages a suite of environmentally sustainable natural gas power facilities. The company’s clean energy assets yield stable cash flows underpinned by fixed-rate power purchase agreements with utilities and sizeable corporate patrons.
The company utilizes its stable cash flow to support an appealing dividend (currently offering a 7.1% yield) while simultaneously investing in fresh renewable energy projects. Clearway Energy looks forward to bolstering its high-yielding dividends towards the upper echelon of its annual 5% to 8% growth range until 2026.
Key to this growth strategy is its capital recycling approach. Clearway gained substantially from divesting its thermal assets in 2022, raking in approximately $1.3 billion in cash proceeds. The company has been consistently re-allocating these funds into more lucrative renewable energy ventures. In the previous year, it earmarked $215 million for wind, solar, storage, and wind repowering projects set to commence power generation and cash flow this year. Concurrently, prospective deals are in the pipeline to rechannel the remaining proceeds into high-return renewable projects. This roadmap positions Clearway to bolster its funds available for dividends from $342 million last year to an anticipated $435 million in the near future.
The company is beginning to foresee a growth trajectory beyond 2026. The contract renewal rates on its recent natural gas power plant contracts hint at levels supportive of the lower spectrum of its expected dividend growth in 2027. Simultaneously, fueled by surging demand for renewable energy, it anticipates a wealth of fresh investment avenues. Clearway’s parent firm boasts an extensive array of ongoing projects under development. Moreover, Clearway is exploring opportunities to revitalize existing wind farms and augment battery storage capacity.
With its stock registering a 30% decline over the past year due to escalating interest rates, paired with ample growth opportunities propelled by the renewable energy wave, Clearway emerges as an astute choice for long-term investment at this juncture.
Riding High on the Automotive Future
Neha Chamaria (Ford Motor): Amidst a notable 19% upsurge in Ford’s stock value over the last three months, recent developments suggest the automotive behemoth may just be on the cusp of a substantial uptrend.
Ford recently released robust figures for both its fourth quarter as well as full-year performance in 2023, demonstrating resilience against macroeconomic headwinds and internal barriers like workforce challenges.