2 Dividend Stocks Compounding Quietly While Oil Headlines Distract Everyone
Key Points
Brookfield Renewable focuses on utility-scale green energy projects.
NextEra blends a reliable utility with a higher-growth green energy business.
- 10 stocks we like better than Brookfield Renewable ›
The energy sector is usually a great place to find high-yielding dividend stocks with wide moats. However, many of those companies are heavily exposed to volatile gas and oil prices. Those prices have become even more volatile after the outbreak of the Iran war.
However, there are still plenty of stable, high-yielding energy stocks with limited exposure to gas and oil. Let's take a look at two of those stocks -- Brookfield Renewable (NYSE: BEPC) and NextEra Energy (NYSE: NEE) -- and see why they're still reliable dividend plays.
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Brookfield Renewable
Brookfield Renewable is well-insulated from volatile oil prices because it builds hydroelectric dams, wind farms, solar power plants, and other green energy projects. It has a presence in 25 countries, an operational capacity of 47.3 GW, and a pipeline of more than 200 GW of renewable energy projects (including 85 GW in advanced-stage projects).
It already holds long-term renewable power agreements with hyperscalers like Microsoft, Amazon, and Alphabet's Google, as well as large utilities and industrial clients. Most of its recent growth has been driven by the rapid expansion of the cloud infrastructure and AI markets, as well as new decarbonization and green manufacturing initiatives.
About 90% of Brookfield Renewable's revenue is locked into long-term fixed-price or inflation-linked contracts, with a weighted-average duration of 12 years. That stickiness ensures that it can generate stable growth through market downturns.
From 2020 to 2025, its funds from operations (FFO) per share -- which reflects its true cash yield by excluding its depreciation -- rose from $1.30 to $2.01. That growth easily covered its annual dividends, which rose from $1.16 to $1.49 per share during that same period. It pays a forward yield of 4.8%, and it aims to increase its payout by 5%-9% annually.
From 2025 to 2028, analysts expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at 7% CAGR. With an enterprise value of $52 billion, it's still a bargain at 13 times this year's adjusted EBITDA.
NextEra Energy
NextEra Energy is the world's largest producer of wind and solar energy. It owns Florida Power & Light (FPL), the largest regulated electricity utility in the U.S., and NextEra Energy Resources (NEER), a market leader in wind, solar, and battery storage solutions.
FPL serves over 12 million residents across Florida, and its cash flow is stable and predictable because the Florida Public Service Commission approves its rates. NEER, which is growing faster, sells its green energy through long-term, fixed-price power purchase agreements. That balanced business model insulates it from volatile oil and gas prices.
Just like Brookfield Renewable, NextEra is profiting from the rapid growth of the power-hungry cloud, AI, and manufacturing markets. It has 72 GW of total operational capacity (split between FPL and NEER), and a renewables and battery storage development backlog of over 35 GW. Its top customers include Microsoft, Google, and Amazon.
From 2020 to 2025, NextEra's adjusted EPS grew from $2.31 to $3.71. Those profits easily covered its annual dividends, which rose from $1.40 to $2.27 per share during the same period. It's raised its dividend annually for 31 consecutive years and aims to increase its payout by approximately 10% per year. It pays a forward yield of nearly 3%.
Analysts expect NextEra's EPS to grow at a 13% CAGR from 2025 to 2028. That growth should be fueled by its upcoming merger with Dominion Energy (NYSE: D) (expected to close in 2027) as well as the cloud and AI boom. Its stock still looks reasonably valued at 21 times this year's earnings, and it could have plenty of upside potential.
Should you buy stock in Brookfield Renewable right now?
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Leo Sun has positions in Amazon and Brookfield Renewable. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and NextEra Energy. The Motley Fool recommends Brookfield Renewable and Dominion Energy. The Motley Fool has a disclosure policy.
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