FREE INVESTING ANALYSIS
NextEra’s Earnings Portend Well for Utilities and Renewable Energy
Heading into Q1 earnings reporting season, the big question for electric utilities was how big a hit COVID-19 fallout would deliver to demand for power. Now we have answers from first reporter NextEra Energy (NYSE: NEE).
NextEra Energy: Best in Class, But at a Price
NextEra Energy has a very attractive long-term growth profile. But it’s quite vulnerable to a selloff if the sky-high expectations baked into the share price are punctured. One good alternative is its NextEra Energy Partners (NYSE: NEP) unit. The dividend is two percentage points higher with an identical PG&E bankruptcy-proof long-term growth rate.
Big Oil is Back
I became a shareholder of Chevron Corp (NYSE: CVX) when it acquired the former Texaco, which I believe was the first stock I ever bought. I was fresh out of business school and made an investment in Texaco’s dividend reinvestment plan, and I’m happy to report that I literally make more in dividends every year than my original investment. I expect to pass the whole thing on to my kids, hopefully many years from now with the account at a much higher level.
Energy: In the Early Stages of a Bull Market
For the broader market, we’ve long followed a concept we call the “volatility smile.” Simply put, broader stock market volatility is high early in the stages of a bull market, falls to low levels in the middle of a major rally and then rises again in the latter stages of a bull market. And, of course, volatility usually rises sharply during a bear market.
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