NextEra Energy, Inc. (NEE): A Bull Case Theory

We came across a bullish thesis on NextEra Energy, Inc. on The Passive Income Portfolio’s Substack. In this article, we will summarize the bulls’ thesis on NEE. NextEra Energy, Inc.'s share was trading at $83.63 as of January 19th. NEE’s trailing and forward P/E were 26.55 and 21.05 respectively according to Yahoo Finance.

NextEra Energy, Inc., through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. NEE has been aggressively sold over the past two years as investors treated the utility sector as a proxy for long-duration bonds amid higher-for-longer rate fears. This has driven a roughly 20% pullback and pushed NEE’s dividend yield toward 3%, levels not seen since before the pandemic.

The market is mispricing the company as a stagnant utility rather than what it truly is: a high-growth clean energy compounder positioned at the center of rising power demand driven by data centers and AI. While concerns around leverage and refinancing have dominated sentiment, the underlying fundamentals continue to strengthen.

NEE’s investment case rests on its dual-engine structure. Florida Power & Light provides stable, regulated cash flows under a newly approved rate agreement through 2029 in one of the most constructive regulatory environments in the U.S. Alongside this, NextEra Energy Resources is the world’s largest wind and solar developer, with a record renewables backlog fueled by Big Tech’s demand for 24/7 carbon-free power. This scale advantage supports margin expansion and long-term growth as total generation capacity approaches 100 GW by 2026.

Despite heavy growth capex that distorts headline free cash flow, dividend safety remains strong. Management has reiterated 10% annual dividend growth through 2026, supported by a payout ratio of roughly 57% of projected earnings and stable operating cash flow coverage relative to debt. Liquidity remains ample, and refinancing risk is mitigated by a well-laddered debt profile and access to equity and green bond markets.

At current prices, investors are locking in a ~3% yield with a credible path to high-single-digit dividend growth, translating into an expected low-double-digit total return. While risks around rates, regulation, and alternative energy technologies remain, NEE now offers a rare entry point into a premier long-term compounder with an unusually attractive risk-reward profile.

Previously, we covered a bullish thesis on PG&E Corporation (PCG) by Acid Investments in February 2025, which highlighted the market’s overreaction to Los Angeles wildfire risks, PCG’s lack of direct liability, and its above-peer EPS growth outlook. PCG’s stock price has appreciated by approximately 15.61% since our coverage, as the thesis played out. The Passive Income Portfolio shares a similar view on utilities but emphasizes clean energy scale, dividend growth, and AI-driven power demand in NextEra Energy.

NextEra Energy, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 72 hedge fund portfolios held NEE at the end of the third quarter which was 66 in the previous quarter. While we acknowledge the potential of NEE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.