Feature Article

In late January, NextEra Energy Partners (NYSE: NEP) management extended guidance for 12 to 15 percent dividend growth through calendar year 2026. That’s off a current yield of nearly 5.3 percent, implying an end of period payout on the current price of between 8.3 and 9.2 percent.

Between mid-2020 and summer 2022, shares of Aggressive Holding National Fuel Gas (NYSE: NFG) roughly doubled—for a time exceeding my “consider taking profits” level. They’ve since retreated about -25 percent and are positioned to make another run.

All in all, it was a pretty flat Q1. The Dow Jones Utility Average finished lower by about -2 percent, including dividends. And that was a mark all three of our model portfolios were able to top: On average, Aggressive Holdings were up 3.06 percent, Conservative Holdings slipped -0.79 percent and Top 10 DRIPs retreated -0.96 percent.

We’re barely three months in. But already, 80 Utility Report Card companies have announced dividend increases for 2023. I expect many others to join them in the next few months.

The growth formula for regulated utilities hasn’t changed this year: Electric, gas and water companies identify what needs fresh investment—to bring on new business and residential customers, increase efficiency, improve safety and environmental remediation and/or build new facilities and assets to accommodate higher volumes.

NextEra Energy (NYSE: NEE) was the first major mover in American renewable energy—forging relationships across the country with prospective customers, local governments and suppliers years ahead of the competition en route to building its current 65 gigawatt capacity operating portfolio. And the company is set to continue that dominance, coming off a record year of 8 GW of new contracts and 5 GW start ups despite supply chain challenges. The Florida Power & Light utility is developing what management calls a 160 GW solar, storage and hydrogen opportunity over the next 20 years. And unregulated NextEra Energy Resources has $71 billion total assets, 30 GW of generation and a backlog of signed contracts for 19 GW more.

The stocks in each portfolio all have the fundamental objective to build wealth. But they’re set up to do it in different ways.

Fortum OYJ (Finland: FORTUM, OTC: FOJCF) is breaking its annual dividend for calendar 2023 into two semi-annual payments for April and October. The total of 91 Euro cents is an effective 20 percent cut from 2022’s annual payment of EUR1.14 per share. Management telegraphed a reduction late last year, when the largesse of the German government allowed it to escape the meltdown of Uniper SE. The company ultimately exited the power generation company and energy retailer it had spent years pursuing with a loss of roughly EUR6 billion.

No doubt about it: The so-called culture war has spread to energy. And as a result, pretty much everyone has an opinion on complex challenges that have historically been left to engineers, physicists and finance guys. The inevitable result: There are literally voices attacking every available energy resource. And from the basic economics of various energy sources to environmental impact it’s all seemingly up for debate.