NextEra Energy (NEE): Among the Best Dividend Aristocrat Stocks with Over 3% Yield

We recently published a list of the 15 Best Dividend Aristocrat Stocks with Over 3% Yield. In this article, we are going to take a look at where NextEra Energy, Inc. (NYSE:NEE) stands against other best dividend aristocrats with a high yield.

Dividend Aristocrats are the companies that have raised their payouts for 25 consecutive years or more. Dividends have been an important part of the overall market return for a very long time. According to a report by S&P Global, dividends have represented approximately 31% of the total return of the broader market from 1926 to February 2025, while capital appreciation has accounted for 69%.

Growing dividends consistently highlight the companies’ confidence in their firms’ prospects as market participants see this as a sign of corporate maturity and strong balance sheets. Dividend aristocrats reveal characteristics of both capital growth and dividend income, as opposed to alternative income strategies that mainly pay attention to pure yield or pure capital appreciation.

Investors are more inclined toward dividend growth stocks, and the performance of these equities has also remained stable over the years. According to a report by S&P Global, dividend aristocrats have reported higher returns with lower volatility over the long run as compared to the broader market, which eventually resulted in higher risk-adjusted returns.

In addition to dividend growth, dividend yield is also an important component of total return. The ability to increase dividends does not come at the expense of lower yields; in fact, the dividend aristocrats index has consistently delivered higher yields than its benchmark. The index had dividend yields within the range of 2.0% to 2.8% over the 28-year period, as reported by S&P Global. Moreover, the average dividend yield of the index was 2.5%, compared with a 1.8% dividend yield of the broader market.

As highlighted above, dividend aristocrats have shown lower volatility as compared to the broader market index. Their ability to provide downside protection can be seen in the upside and downside capture ratios. The S&P report highlighted that the dividend aristocrats index has outperformed the market index 66.67% of the time in down months and 43.88% of the time in up months. Notably, the index also has a lower drawdown level compared with the benchmark index. In addition, the dividend aristocrats index provided an average excess return of 0.87% in down months over the broader market. To further emphasize their low volatility, the report mentioned that the dividend aristocrats had a market beta of 0.8 between December 29, 1989, and February 28, 2025.

With the AI boom and tech stocks taking center stage, dividend stocks are somehow overlooked by the market. However, the recent market sell-off has restored their importance, as the Dividend Aristocrats Index has surged by over 2% since the start of 2025, compared with a nearly 5% decline in the broader market. The significance of these equities is much more apparent over long periods of time. According to the S&P Global report, the dividend aristocrats index outperformed its benchmark by an average of 1.59% per year between January 2000 and February 2025. This outperformance was because of the fundamental characteristics of the constituents of the index.

Our Methodology

For this article, we scanned a list of the Dividend Aristocrat index, which tracks the performance of companies that have raised their payouts for 25 consecutive years or more. From that list, we picked 15 stocks with dividend yields above 3%, as of March 29. The stocks are ranked in ascending order of their dividend yields.

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NextEra Energy, Inc. (NYSE:NEE)

Dividend Yield as of March 29: 3.22%

NextEra Energy, Inc. (NYSE:NEE) is a Florida-based renewable energy company that generates, transmits, and sells electricity. The company recently announced a CEO change as part of the company’s planned succession process. Its current executive Vice President, Brian Bolster, will become the company’s next CEO. In the past 12 months, the stock has surged by over 11%.

NextEra Energy, Inc. (NYSE:NEE)’s clean energy segment is crucial to its operations as it operates under long-term contracts and generates stable cash flow for the company. The company is also planning to expand this division rapidly with the growing demand for renewables. The management announced to boost its renewable energy capacity from 36 gigawatts to 46.5 gigawatts by 2027.

NextEra Energy, Inc. (NYSE:NEE) currently pays a quarterly dividend of $0.5665 per share, having raised it by 14% in February. Through this increase, the company stretched its dividend growth streak to 29 years, which makes it one of the best dividend aristocrat stocks. Its stable cash position enabled the company to achieve a consistent track of dividend growth. In FY24, the company generated $13.2 billion in operating cash flow. Looking forward, it plans to grow its dividend per share by around 10% annually through 2026. The stock has a dividend yield of 3.22%, as recorded on March 29.

Overall, NEE ranks 11th on our list of the best dividend aristocrat stocks. While we acknowledge the potential of NEE as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than NEE but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.

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