In 10 Years, Will You Wish You'd Bought NextEra Energy Right Now?

Shares of NextEra Energy (NYSE: NEE) currently sit more than 10% below their 52-week high. The utility company's stock price has slumped following the surprising announcement that it agreed to buy Dominion (NYSE: D) in an all-stock deal valued at nearly $67 billion. The merger would create the world's largest regulated electric utility company.

The deal adds near-term risks from regulatory approval uncertainty and potential integration challenges. However, the long-term benefits could far outweigh those risk factors. Here's why I think that investors looking back a decade from now will wish they had capitalized on the sell-off to buy the utility stock.

Image source: The Motley Fool.

Creating a power supermajor

NextEra Energy already owns the country's largest electric utility (Florida Power & Light (FPL)). Additionally, it operates one of America's largest energy infrastructure development companies (NextEra Energy Resources). NextEra is a world leader in wind, solar, and battery storage.

The company's merger with Dominion would create a power supermajor. The combined company would be the world's largest regulated electric utility business by market capitalization. It would serve about 10 million utility customer accounts across four fast-growing states and own 110 gigawatts (GW) of power generation capacity. It would be a leader in almost every category, including the world leader in renewables and battery storage, the top U.S. gas-fired power producer, and the second-largest nuclear power operator. That would give it an unmatched global scale, enabling it to buy, build, finance, and operate more efficiently than competitors.

Accelerating its ability to capitalize on the AI power megatrend

NextEra Energy's leading Florida-based utility operations and clean-energy-focused energy resources business already puts it in a strong position to capitalize on surging power demand from AI data centers and other catalysts. The company expected to invest between $295 billion and $325 billion in capital projects through 2032 to support rising power demand. That investment level had NextEra Energy on track to grow its adjusted earnings per share by more than 8% annually through 2032, a rate the company expects to maintain through at least 2035.

The Dominion deal will accelerate its already robust growth plan. Dominion operates in three fast-growing states, including Virginia, a hotbed of data center development. By acquiring Dominion, NextEra can leverage its larger scale to fully capitalize on the data center power opportunity. The company believes it can grow its adjusted earnings per share by more than 9% annually through 2032 and expects to sustain that growth rate through 2035. Further, it can deliver that growth while enhancing its credit profile and lowering its dividend payout ratio.

You'll likely regret missing this opportunity

Megamergers aren't without risk, which is why shares of NextEra have tumbled more than 10% since it unveiled its massive Dominion Energy deal. However, it will create a power supermajor and accelerate NextEra's already robust growth profile over the next decade. I think the sell-off will look like an unbelievable buying opportunity with the benefit of a decade of hindsight.

Matt DiLallo has positions in NextEra Energy. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.