How Good Has NEE Stock Actually Been?

Stockholders of electrical utility NextEra Energy (NYSE: NEE) were feeling juiced this fall as shares of the massive power generation company surged more than 20% between mid-September and late October. That's better than the S&P 500 has done all year!

But NextEra has had plenty of disappointing months in its recent past. Does this one-time surge make up for years of underperformance? Here's what investors need to know.

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One year: Close but not quite

Investors who bought NextEra stock on Dec. 1, 2024, had some immediate disappointment, as their shares almost immediately tumbled 10%. In fact, NextEra's stock spent most of the year underwater, until the autumn surge propelled shares skyward. Now those same stockholders are looking at a 7.8% return for the year, or a 13.1% return if you factor in reinvestment of the company's dividend, which currently yields about 2.1%.

However, the broader market, as measured by the S&P 500, has gone up by 13.1%, not including reinvested dividends. If you do factor those in, the market is up 15% for the year, beating NextEra's share price performance, but not by much:

Are things still close for investors who bought in three or five years ago?

Three and five years: Ouch!

An investment in NextEra from three years ago (Dec. 1, 2022) is losing badly to the market. In fact, without counting dividends, it's down by 0.8%. The dividends turn that loss into a slight win, with an 11.2% return, but it's still far from ideal, especially considering the S&P 500's return is 67.2% on an absolute basis and 75.3% on a total return basis, meaning NextEra stock trails the market's return by more than 60 percentage points.

The five-year picture isn't much better for the company. On an absolute basis, it's still badly trailing the S&P 500, 15.1% to 88.3%, and dividends don't close that 70-plus percentage point gap, with NextEra's 33.2% return badly trailing the S&P 500's 103.6% return.

A rough patch for the stock

The last five years have been rough for NextEra's shares ... and its shareholders. Compare that to the prior five years (Dec. 1, 2016, to Dec. 1, 2020), when NextEra's total stock returns absolutely destroyed the S&P 500's, 237.6% to 94.6%. In fact, NextEra's shares did so well over that period that investors who bought in 10 years ago are still looking at market-beating returns, despite the recent underperformance.

Like many other utilities and dividend stocks, NextEra Energy is an investment that tends to follow a "slow and steady" path to investing success, rewarding long-term investments much more than short-term ones.

John Bromels has positions in NextEra Energy. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.