Why NextEra Energy Stock Sank Today

Key Points

• NextEra Energy just announced earnings growth that doesn't resemble a sleepy utility.

• The company plans to continue to boost dividends by about 10% per year.

• "Significant" demand will keep the company growing in the coming years.

• 10 stocks we like better than NextEra Energy ›

NextEra Energy (NYSE: NEE) just reported a very strong second quarter. Adjusted earnings per share jumped more than 9% year over year. Yet shares in the company are sinking today. NextEra stock was down by 6.3% as of 12:35 p.m. ET.

A solid quarterly earnings report, along with a subsequent plunge in the stock, is a combination that should make investors wonder whether opportunity is knocking. NextEra may be one of those opportunities, and there's a good explanation for why the stock is retreating today.

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Growth, income, and surging demand

NextEra is one of the largest electric utility companies in the country. As such, it should be on the radar of any investor in the utility sector.

It's not just a stodgy utility, though. NextEra operates Florida Power & Light Company (FPL), one of the largest rate-regulated electric utilities in the U.S. It also runs NextEra Energy Resources. That's a subsidiary with higher growth prospects as a leading generator of renewable energy through various solar and wind projects.

The strong performance was coupled with expectations for continued solid results going forward. NextEra management sees adjusted earnings per share increasing by as much as 8% annually through 2027. NextEra also plans to continue to increase its dividend payout by about 10% per year, at least through next year.

That confidence in its FPL subsidiary comes from what it calls "significant demand from [Florida's] growing population." It's not just Florida that has increasing power needs. NextEra is seeing growth across all sectors, it says. It plans for renewables, natural gas-fired generation, and new nuclear supply in the future to satisfy that demand.

So why is the stock tanking today? It's probably just a matter of investors selling the news. NextEra stock had jumped by more than 16% in just the last three months prior to today's drop.

With power demand on the rise, investors seeking dividend income with a growing underlying business might want to take advantage of today's decline for a long-term investment.

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Howard Smith has positions in NextEra Energy. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.