NextEra Energy Falls After Reporting Q3 Earnings: What Investors Need to Know

Shares of NextEra Energy (NYSE: NEE) are down from their recent 52-week high hit in October after the company reported its third-quarter earnings on Oct. 28. Despite growing quarterly earnings by 31% and revenues by 5.3%, shares sold off as Wall Street took a dim view of its revenue falling $200 million short of expectations to $7.97 billion.

Yet, from a new partnership with Alphabet to expectations of a 10% dividend hike next year, long-term investors have good reason to be bullish on NextEra. The $170 billion utility company, which provides power to roughly 12 million people through its wind, solar, nuclear, and natural gas operations, is positioned to thrive in a period of amped-up energy needs that its CEO calls America's "golden age of power demand."

A dividend machine delivering a must-have product

Since 1994, NextEra has grown its dividend every year, including a 10% increase in February 2025 following an identical 10% increase in 2024. All told, the company has raised its dividend by 62% since 2020, which handily outpaces the 25% inflation seen in that time frame.

Zooming out, NextEra's dividend has grown by 966% since 1994. Anyone investing $1,000 in NextEra exactly 31 years ago would today be receiving $1,430 in dividends each year while sitting on capital appreciation of over 5,000%.

These gains, alas, are in the past. But in addition to keeping up robust, inflation-crushing dividend growth in recent years, NextEra is also showing other signs it can continue delivering.

Image source: Getty Images.

The company's subsidiary, Florida Power & Light, is America's biggest electric utility, delivering power to 12 million Floridians. Impressively, it has brought down residential utility bills by 20% from 20 years ago, adjusted for inflation. It has achieved this feat because its operations and management costs are 70% lower than the national average for utilities and 50% lower than its nearest competitor.

Electricity is a must-have product for households; this is why NextEra was able to grow operating revenues by 7.5% in 2008, even amid the worst financial crisis since the Great Depression. It's also why shares have a beta of just 0.74, indicating much lower volatility than the overall markets (a beta of below 1 means a stock is less volatile than the stock market's beta of 1, while a beta greater than 1 means higher-than-average volatility).

Given its fundamentals, management seems highly likely to deliver on its guidance of another 10% dividend increase in early 2026. That would bring the company's dividend yield to over 3%, well above the S&P 500's average of 1.14%.

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

AI to consume as much energy each year as the nation of Japan

By 2030, power-hungry AI data centers will consume as much energy each year as all of Japan, a nation of 125 million people, according to the International Energy Agency.

This is why OpenAI CEO Sam Altman has called for an "energy breakthrough" to meet the massive power demand...and why NextEra CEO John Ketchum called the setup "a golden age for power demand" in his Q3 earnings presentation.

This presents an enormous potential tailwind to NextEra, which, again, is the largest provider of electricity in the United States. And with nuclear power now in favor with Washington (President Donald Trump has signed an executive order to quadruple America's nuclear power generation), NextEra's partnership with Alphabet to recommission the Duane Arnold nuclear power plant in Palo, Iowa, by early 2029 is a big deal. This 615-megawatt plant would deliver enough electricity to power hundreds of thousands of homes a year and is expected to boost NextEra's earnings per share by $0.16 each year.

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

Despite this setup, as we enter the "golden age of power demand," NextEra shares are still cheap, with a price-to-earnings ratio of 26, below the S&P 500 average of 32. For investors seeking value, growth, and especially income, NextEra Energy shares are a buy.

William Dahl has positions in NextEra Energy. The Motley Fool has positions in and recommends Alphabet and NextEra Energy. The Motley Fool has a disclosure policy.