NextEra Energy’s Q4 2024 Earnings: Here’s What Investors Should Be Watching

TradingKey - While the renewable energy sector has suffered from a lack of positive sentiment recently, mainly due to fossil fuel-friendly President Trump being elected, the long-term tailwinds for the industry are still intact.

That’s mainly because renewable energy is becoming cheaper than traditional fossil fuels in many cases and the energy mix in the US will likely see a rise in the share that renewables has. 

The world’s largest renewable energy company is NextEra Energy Inc (NYSE: NEE), which is actually a company that has two core parts; a massive utility called Florida Power & Light (FPL) and a clean energy development business called NextEra Energy Resources (NEER), which is one of the world’s largest generator of renewable energy from wind and solar.

NextEra Energy is set to report is Q4 2024 earnings before the market open on Friday (24 January). Here’s what renewable energy and dividend investors should know about what to expect.

Setting the stage for 2025

Investors will be keen to hear from NextEra’s management on the company’s plans for 2025 development of clean energy projects and how the company is forecasting demand for its core utility business as well.

In Q3 2024, NextEra posted adjusted earnings per share (EPS) of US$1.03, which was up 10% year-on-year and in line with its own historical growth. The company also maintained its projection that it will grow adjusted EPS through 2027 at a range of between 6% and 8%.

Management reiterated that it would be “disappointed if it was not able to deliver financial results at or near the top end of our adjusted EPS expectations”.

Building resilient power generation

From the EPS perspective, FPL delivered US$0.63 in EPS for Q3 2024 and the utility has been a consistent performer when it comes to growing EPS. 

Investors will be looking for another strong quarter from FPL despite the last quarter of 2024 being a period that included Hurricane Milton, one of the strongest hurricanes recorded over the Gulf of Mexico in nearly two decades.

According to NextEra management, Hurricane Milton (as well as Hurricane Helene at the end of September) caused a total of 2.68 million FPL customers to lose power. However, power was restored for 95% of customers within two days for Helene and four days for Milton.

It’s down to FPL’s hardy infrastructure that the company is now in the process of setting new base rates for the period covering 2026-2029. The utility has built-in increases, which means it can continue to serve as the cash cow for NextEra as its NEER business builds out more renewables projects.

Eyes on NEER and the Fed

As for NextEra’s growth engine – NEER – the renewables developer has a strong backlog of projects and investors will be keen to hear more from management on various projects they have for development in 2025.

During the company’s Q3 2024 earnings, NextEra’s renewables and storage backlog for 2024-2025 stands at 14 gigawatts (GW) with the projects being a mixture of wind, solar, energy storage, and wind repowering.

Finally, investors in NextEra Energy also typically like the company for its dividend growth policy, with its dividend per share (DPS) having typically grown at a compound annual growth rate (CAGR) of close to 10% over the past decade.

Dividend investors will want to hear more from the company on where the renewable energy giant sees the potential for further dividend payouts amid a higher-than-normal rate environment. The stock has tended to move down on days when the market has been worried about the potential of an interest rate cut from the US Federal Reserve (Fed).

In terms of the dividend, NextEra is offering investors a yield of 3%. Its shares have gained 19.4% in the past 12 months but have underperformed the S&P 500 Index’s return of 25.1% during the same period.