Latest news with #NextEraEnergy
Yahoo
a day ago
- Business
- Yahoo
A 300% Increase in AI Data Center Demand Will Propel Growth for These 3 High-Yield Stocks
Artificial intelligence effectively lives in data centers. Demand from data centers for electricity is projected to increase by 300% over the next decade or so. NextEra Energy, Dominion Energy, and Brookfield Renewable are all set to benefit from this increase in power demand. 10 stocks we like better than Dominion Energy › Artificial intelligence (AI) isn't technically a living thing, even though it can seem like one at times. The truth is, if you stop providing electricity to the hardware that supports any AI system, it ceases to operate. And that's the big story behind the growth opportunity ahead for NextEra Energy (NYSE: NEE), Dominion Energy (NYSE: D), and Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). Each of these high-yield stocks offers investors a way to profit from growth in the AI space without having to try to pick an AI winner. At its current share price, NextEra Energy has a 3.2% dividend yield. That compares to a 1.3% average yield for stocks in the S&P 500 index and the 2.9% yield of the average utility. You can find utilities with higher yields, but NextEra's is relatively attractive. The real story here, however, is dividend growth. Management has boosted NextEra's dividend at a 10% annualized clip over the past decade, and it expects to continue doing so at about that rate over the next couple of years. Its payout growth has been supported by the utility's steadily growing regulated business in Florida and, more to the point, its fast-growing clean energy business. The clean energy business sells power to other companies under long-term contracts. Large companies are increasingly looking for clean energy solutions as they expand, including the technology companies that are powering the AI revolution. And AI-related electricity demand in the United States is projected to increase by 300% over the next decade or so. Dividend growth investors looking for a way to tap into the AI sector while still maximizing yield will want to do a deep dive on NextEra Energy today. Dominion Energy is a turnaround story, and the stock could be appealing to investors who don't mind taking on just a little extra risk for a lot more yield. The regulated electric utility's yield at the current share price is around 4.7%, which is well above the industry norm. The risk here, however, is pretty low, given the company's government-granted monopolies in the regions it serves. One of those regions, Virginia, happens to be among the largest data center markets in the world. Add in a large offshore wind farm Dominion is building in the state, and it seems well-positioned to take advantage of the added demand that AI will create. The problem here is that the utility is currently focused on strengthening its balance sheet, which in part entails reducing its dividend payout ratio to bring it back in line with its peers. Basically, expect dividend growth at Dominion Energy to be on hold for at least a couple of years. However, investors who buy today will get a well-above-average yield, which seems ample compensation for income seekers as they await the stock's return to dividend growth in the future. At the current share price, Brookfield Renewable Partners yields 6.2%. The company also has a roughly identical corporate share class with a lower 5% yield, a function of the higher demand for those shares. As the name implies, Brookfield Renewable invests in renewable power assets such as hydroelectric, solar, and wind, as well as battery storage and nuclear power. Unlike NextEra and Dominion, Brookfield Renewable operates on a global scale, allowing it to take advantage of AI and data center demand wherever it is popping up. For example, Brookfield Renewable has inked a deal with Microsoft to provide the tech giant with 10.5 gigawatts of new renewable power over the next decade. The purpose of the deal is specifically to support Microsoft's data center expansion. This shows what Brookfield Renewable's globally diversified portfolio can support. Investors should take a serious look at the high-yield opportunity here. Wall Street is excited about artificial intelligence and its rapid development, but many investors are focusing specifically on the direct AI plays. It's always tough to accurately pick long-term winners in fast-changing emerging markets. However, it is pretty clear that no matter which AI companies wind up the big winners, they will all need reliable access to growing supplies of electricity. And that means that high-yield stocks like NextEra Energy, Dominion Energy, and Brookfield Renewable are likely to be winners from the AI revolution, too. Before you buy stock in Dominion Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Dominion Energy wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor's total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Reuben Gregg Brewer has positions in Brookfield Renewable Partners and Dominion Energy. The Motley Fool has positions in and recommends Microsoft and NextEra Energy. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and Dominion Energy and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. A 300% Increase in AI Data Center Demand Will Propel Growth for These 3 High-Yield Stocks was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
a day ago
- Business
- Yahoo
20250604 - NextEra Energy: A Misunderstood Growth Machine
It's not easy to find bargains among well-established corporate giants. However, Mr. Market sometimes presents such opportunities to prudent investors. The renewable energy sector has taken a beating since President Trump's victory in November as he has made his intentions clear to support the fossil fuel sector. NextEra Energy, Inc. (NYSE:NEE), which owns the largest electric utility in the United States (Florida Power & Light Company) and also one of the leading clean energy companies in the world (NextEra Energy Resources) has also come under pressure as a result, losing over 6% of its market value in 2025 alone. A deeper dive into the company's supply chain reveals NextEra is largely immune to tariffs, making it a contrarian play in the renewable energy sector. The reasonable valuation of the company sweetens the deal, while attractive long-term macroeconomic prospects suggest a long runway for NextEra to grow. Warning! GuruFocus has detected 9 Warning Signs with NEE. NextEra Energy, headquartered in Florida, is the parent company of both Florida Power & Light and NextEra Energy Resources. Based on retail electricity sold, FPL is the largest rate-regulated utility in the U.S., serving approximately 12 million customers in Florida. NEER, on the other hand, serves the wholesale energy markets in both the U.S. and Canada and is the world's largest wind and solar projects operator. The company also has a battery storage business. Through FPL and NEER, NextEra maintains a well-diversified energy portfolio consisting of wind, solar, nuclear power, and even natural gas. Before moving on to discuss the long-term outlook for NextEra, it is important to address the tariff threats facing the renewable energy industry that have dampened the investor sentiment toward NextEra stock. On April 21, the U.S. Department of Commerce announced its study results from an investigation of antidumping duties on solar cells imported from several Southeast Asian nations, including Cambodia, Malaysia, Thailand, and Vietnam. Based on the findings, the Commerce Department recommended substantial tariffs on crystalline photovoltaic cells imported from these countries. For context, several Cambodian companies are expected to see tariffs exceeding a staggering 3,400%, while almost all other exporters representing Southeast Asian nations are expected to see tariffs exceeding 100%. The International Trade Administration is expected to announce its final determination on these tariffs by June 2, in less than a month. Southeast Asian nations have played a critical role in helping solar project costs remain low for Americans for years. In 2023, the four main countries targeted by the latest round of U.S. tariffs exported almost $12 billion worth of solar modules to the United States. Exhibit 1: Import statistics Source: International Trade Administration Newly announced tariffs are likely to make it more expensive for Americans to access solar power. However, NextEra Energy is in a unique position to show resilience from these tariffs compared to many of its peers that are heavily reliant on solar modules imported from Southeast Asia. First, NextEra Energy has commendably managed its supply chain efficiently in the last few years, reducing its reliance on Southeast Asia. For example, the company is currently sourcing wind turbines domestically, which includes manufacturing required components in its plants in Florida. The company also has ties with tariff-unaffected nations such as India. Strategic diversification of the supply chain to gain exposure to U.S. allies has made it possible for NextEra to weather the tariff storm better than most of its peers. Second, NextEra is often the largest customer of many of its suppliers, which creates wiggle room for the company to negotiate deals with suppliers to pass on any tariff impact to them. Suppliers have little bargaining power with NextEra because of its scale, which is likely to come to the rescue in the next few months. Third, NextEra has already secured contracts with domestic suppliers to meet the majority of its backlog for its battery storage business, leaving little exposure to tariffs. Commenting on the overall tariff exposure of the company during the first-quarter earnings call a couple of weeks ago, NextEra CEO John Ketchum revealed that the overall tariff exposure of the company through 2028 is just $150 million compared to total capital expenditures planned through 2028 of $75 billion. In a nutshell, only 0.2% of the company's capex budget is exposed to new tariffs. Encouragingly, CEO Ketchum is confident of NextEra's ability to shield itself from this exposure through renegotiated contracts. We think that we're looking at around $150 million of exposure on tariffs. That is based on the contractual protections we have in our existing contracts with suppliers and the discussions that we have had with them since Liberation Day on April 2. So that's the first piece. So that works you down to $150 million. Then the point we were making in the prepared remarks is that not only do we have the ability to shift tariff risk to suppliers and supply contracts, which I just covered, we also have trade measure protection provisions in our customer contracts. So we believe we got a really good shot at working with our customers to take that $150 million exposure down significantly and perhaps even down to zero if we use the track record we had around circumvention. Going by the CEO's above remarks and the strengths highlighted earlier in this segment, investor fears over new tariffs seem overblown. Tariff threats aside, the next step is to evaluate the long-term industry outlook for NextEra Energy. After a period of lackluster demand growth, the U.S. has entered a new era in which the demand for electricity is expected to grow at a healthy rate. According to Deloitte, the electricity demand in the U.S. will increase by 10% to 17% between 2024 and 2030, marking a notable improvement from stable demand over the past five years. The main reasons behind these rosy projections include the growing electricity consumption by data centers and the exponential growth in EVs. According to Deolitte, data center demand alone will lead to around 11 GW of incremental electricity demand by 2030. In addition to this, the expected boost in domestic manufacturing will also drive electricity demand higher in the coming years. With electricity demand predicted to see historically high growth in the next five years, NextEra's utility arm, Florida Power, is well-positioned to thrive. To capture a sizeable share of the growing electricity demand, FPL is planning to invest approximately $50 billion through 2029 and add more than 25 GW of new capacity by 2034. These ambitious goals align well with the projected growth in electricity demand. Another tailwind helping NextEra is the expected growth in renewable energy consumption. Although the Trump administration may initially focus on fossil fuel growth, the long-term outlook for renewable energy adoption remains strong. According to the International Energy Administration's ambitious plans which aim to achieve 100% clean electricity by 2035, wind and solar energy projects are expected to account for around 70% of energy generation. This equates to approximately 2 TW of capacity. As the global leader in wind and solar power generation, NextEra Energy Resources is well-positioned to benefit from this projected growth. NextEra will also benefit from its battery storage facilities. To meet renewable energy goals, high-quality energy storage solutions are necessary. Identifying this need, NextEra has aggressively expanded into battery storage, which has enabled the company to be recognized as a 360-degree renewable energy solutions provider. NextEra Energy is currently valued at a forward P/E of 18.28 in comparison to its five-year average of 24.33, which implies the company is cheaply valued from a historical valuation perspective. At the current market price, the dividend yield is also attractive at just over 3.4%. Interestingly, the company is expected to return to growth this year after registering a 12% YoY revenue decline in 2024. According to analyst projections, revenue will grow almost 16% this year, followed by 8.3% in 2026 and 11.6% in 2027. Earnings are also expected to grow at high-single-digit rates through 2029. These estimates seem rational given the strong growth expectations for electricity demand in the U.S. and the steady growth in renewable energy usage. Despite the market pessimism toward renewable energy stocks following President Trump's victory last November, some investing gurus are betting on NextEra Energy. Some of the institutional investors that added to their long position in NextEra leading up to 2025 include Blackstone Group, T. Rowe Price, and D. E. Shaw. However, there are other gurus who have reduced their exposure to NextEra in recent times, including Mario Gabelli (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), and Robert Bruce (Trades, Portfolio). According to GuruFocus data, NextEra has seen more guru sells than buys in recent times. Source: GuruFocus NextEra Energy stock has performed poorly this year due to concerns hanging over the sustainability of the renewable industry's growth under President Trump's administration. Although short-term challenges persist, a closer evaluation of newly announced tariffs reveals NextEra is unlikely to be hurt. The long-term outlook for FPL is promising with several tailwinds driving the demand for electricity in the United States, and NEER will benefit from the momentum behind renewable energy. Valued reasonably along with a dividend yield of 3.4%, NextEra Energy seems an attractive bet on the global energy transition. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
20250604 - NextEra Energy: A Misunderstood Growth Machine
It's not easy to find bargains among well-established corporate giants. However, Mr. Market sometimes presents such opportunities to prudent investors. The renewable energy sector has taken a beating since President Trump's victory in November as he has made his intentions clear to support the fossil fuel sector. NextEra Energy, Inc. (NYSE:NEE), which owns the largest electric utility in the United States (Florida Power & Light Company) and also one of the leading clean energy companies in the world (NextEra Energy Resources) has also come under pressure as a result, losing over 6% of its market value in 2025 alone. A deeper dive into the company's supply chain reveals NextEra is largely immune to tariffs, making it a contrarian play in the renewable energy sector. The reasonable valuation of the company sweetens the deal, while attractive long-term macroeconomic prospects suggest a long runway for NextEra to grow. Warning! GuruFocus has detected 9 Warning Signs with NEE. NextEra Energy, headquartered in Florida, is the parent company of both Florida Power & Light and NextEra Energy Resources. Based on retail electricity sold, FPL is the largest rate-regulated utility in the U.S., serving approximately 12 million customers in Florida. NEER, on the other hand, serves the wholesale energy markets in both the U.S. and Canada and is the world's largest wind and solar projects operator. The company also has a battery storage business. Through FPL and NEER, NextEra maintains a well-diversified energy portfolio consisting of wind, solar, nuclear power, and even natural gas. Before moving on to discuss the long-term outlook for NextEra, it is important to address the tariff threats facing the renewable energy industry that have dampened the investor sentiment toward NextEra stock. On April 21, the U.S. Department of Commerce announced its study results from an investigation of antidumping duties on solar cells imported from several Southeast Asian nations, including Cambodia, Malaysia, Thailand, and Vietnam. Based on the findings, the Commerce Department recommended substantial tariffs on crystalline photovoltaic cells imported from these countries. For context, several Cambodian companies are expected to see tariffs exceeding a staggering 3,400%, while almost all other exporters representing Southeast Asian nations are expected to see tariffs exceeding 100%. The International Trade Administration is expected to announce its final determination on these tariffs by June 2, in less than a month. Southeast Asian nations have played a critical role in helping solar project costs remain low for Americans for years. In 2023, the four main countries targeted by the latest round of U.S. tariffs exported almost $12 billion worth of solar modules to the United States. Exhibit 1: Import statistics Source: International Trade Administration Newly announced tariffs are likely to make it more expensive for Americans to access solar power. However, NextEra Energy is in a unique position to show resilience from these tariffs compared to many of its peers that are heavily reliant on solar modules imported from Southeast Asia. First, NextEra Energy has commendably managed its supply chain efficiently in the last few years, reducing its reliance on Southeast Asia. For example, the company is currently sourcing wind turbines domestically, which includes manufacturing required components in its plants in Florida. The company also has ties with tariff-unaffected nations such as India. Strategic diversification of the supply chain to gain exposure to U.S. allies has made it possible for NextEra to weather the tariff storm better than most of its peers. Second, NextEra is often the largest customer of many of its suppliers, which creates wiggle room for the company to negotiate deals with suppliers to pass on any tariff impact to them. Suppliers have little bargaining power with NextEra because of its scale, which is likely to come to the rescue in the next few months. Third, NextEra has already secured contracts with domestic suppliers to meet the majority of its backlog for its battery storage business, leaving little exposure to tariffs. Commenting on the overall tariff exposure of the company during the first-quarter earnings call a couple of weeks ago, NextEra CEO John Ketchum revealed that the overall tariff exposure of the company through 2028 is just $150 million compared to total capital expenditures planned through 2028 of $75 billion. In a nutshell, only 0.2% of the company's capex budget is exposed to new tariffs. Encouragingly, CEO Ketchum is confident of NextEra's ability to shield itself from this exposure through renegotiated contracts. We think that we're looking at around $150 million of exposure on tariffs. That is based on the contractual protections we have in our existing contracts with suppliers and the discussions that we have had with them since Liberation Day on April 2. So that's the first piece. So that works you down to $150 million. Then the point we were making in the prepared remarks is that not only do we have the ability to shift tariff risk to suppliers and supply contracts, which I just covered, we also have trade measure protection provisions in our customer contracts. So we believe we got a really good shot at working with our customers to take that $150 million exposure down significantly and perhaps even down to zero if we use the track record we had around circumvention. Going by the CEO's above remarks and the strengths highlighted earlier in this segment, investor fears over new tariffs seem overblown. Tariff threats aside, the next step is to evaluate the long-term industry outlook for NextEra Energy. After a period of lackluster demand growth, the U.S. has entered a new era in which the demand for electricity is expected to grow at a healthy rate. According to Deloitte, the electricity demand in the U.S. will increase by 10% to 17% between 2024 and 2030, marking a notable improvement from stable demand over the past five years. The main reasons behind these rosy projections include the growing electricity consumption by data centers and the exponential growth in EVs. According to Deolitte, data center demand alone will lead to around 11 GW of incremental electricity demand by 2030. In addition to this, the expected boost in domestic manufacturing will also drive electricity demand higher in the coming years. With electricity demand predicted to see historically high growth in the next five years, NextEra's utility arm, Florida Power, is well-positioned to thrive. To capture a sizeable share of the growing electricity demand, FPL is planning to invest approximately $50 billion through 2029 and add more than 25 GW of new capacity by 2034. These ambitious goals align well with the projected growth in electricity demand. Another tailwind helping NextEra is the expected growth in renewable energy consumption. Although the Trump administration may initially focus on fossil fuel growth, the long-term outlook for renewable energy adoption remains strong. According to the International Energy Administration's ambitious plans which aim to achieve 100% clean electricity by 2035, wind and solar energy projects are expected to account for around 70% of energy generation. This equates to approximately 2 TW of capacity. As the global leader in wind and solar power generation, NextEra Energy Resources is well-positioned to benefit from this projected growth. NextEra will also benefit from its battery storage facilities. To meet renewable energy goals, high-quality energy storage solutions are necessary. Identifying this need, NextEra has aggressively expanded into battery storage, which has enabled the company to be recognized as a 360-degree renewable energy solutions provider. NextEra Energy is currently valued at a forward P/E of 18.28 in comparison to its five-year average of 24.33, which implies the company is cheaply valued from a historical valuation perspective. At the current market price, the dividend yield is also attractive at just over 3.4%. Interestingly, the company is expected to return to growth this year after registering a 12% YoY revenue decline in 2024. According to analyst projections, revenue will grow almost 16% this year, followed by 8.3% in 2026 and 11.6% in 2027. Earnings are also expected to grow at high-single-digit rates through 2029. These estimates seem rational given the strong growth expectations for electricity demand in the U.S. and the steady growth in renewable energy usage. Despite the market pessimism toward renewable energy stocks following President Trump's victory last November, some investing gurus are betting on NextEra Energy. Some of the institutional investors that added to their long position in NextEra leading up to 2025 include Blackstone Group, T. Rowe Price, and D. E. Shaw. However, there are other gurus who have reduced their exposure to NextEra in recent times, including Mario Gabelli (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), and Robert Bruce (Trades, Portfolio). According to GuruFocus data, NextEra has seen more guru sells than buys in recent times. Source: GuruFocus NextEra Energy stock has performed poorly this year due to concerns hanging over the sustainability of the renewable industry's growth under President Trump's administration. Although short-term challenges persist, a closer evaluation of newly announced tariffs reveals NextEra is unlikely to be hurt. The long-term outlook for FPL is promising with several tailwinds driving the demand for electricity in the United States, and NEER will benefit from the momentum behind renewable energy. Valued reasonably along with a dividend yield of 3.4%, NextEra Energy seems an attractive bet on the global energy transition. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
1 Top Energy Stock I Wouldn't Hesitate to Buy in June
U.S. power demand could grow 55% by 2040. NextEra Energy is a leader in all forms of power. The company is in a strong position to continue growing shareholder value at an above-average rate. 10 stocks we like better than NextEra Energy › We use a lot of energy each and every day to power our modern lives. From the gasoline that fuels our cars to the natural gas that heats our homes to the electricity that runs our devices, we can't function in our modern society without energy. Our need for energy in the country is only growing. According to forecasts by IHS Outlook and McKinsey, U.S. power demand will surge 55% by 2040, fueled by AI data centers, the onshoring of manufacturing, and the electrification of everything, including transportation. This forecast bodes well for energy companies. As a leader in the sector, NextEra Energy (NYSE: NEE) is in a strong position to capitalize on the country's growing demand for electricity. That's one of the reasons why I wouldn't hesitate to buy this top energy stock in June. NextEra Energy is a powerhouse in the energy sector. It operates the largest electric utility in the country -- Florida Power & Light (FPL). It also operates NextEra Energy Resources, a leading North American clean energy company. Together, these businesses make NextEra Energy the world's largest producer of renewable energy from the wind and sun and a global leader in battery storage. The company also operates the largest natural gas-fired fleet in the country and has a leading nuclear energy business. These features make NextEra Energy "the quintessential, 'all-forms-of-energy' company," commented CEO John Ketchum on the company's first-quarter earnings conference call. The company doesn't just operate leading energy businesses; it knows how to grow them. No one has built more renewable energy-generation capacity than NextEra Energy over the past couple of decades. It has also built more gas-fired generation than any other company in the past 20 years. NextEra's investments to grow its business have paid big dividends for shareholders. The company has grown its adjusted earnings per share (EPS) at a 9% compound annual rate over the past 20 years. That has helped power a roughly 10% compound annual growth rate (CAGR) in its dividend during that period. The company's rising income and earnings have helped fuel market-crushing total returns for its shareholders (15.7% annualized versus 10.2% for the S&P 500). NextEra Energy's leadership in all forms of energy puts it in a strong position to capture a meaningful share of the growth it sees ahead for power demand. The company estimates that the U.S. will need to add 450 gigawatts (GW) of new power generation capacity to the grid by 2030 to keep up with current demand forecasts. While it will require all forms of energy to meet this demand, renewable energy, especially solar energy, will do most of the heavy lifting because of its lower costs and ability for rapid deployment. That outlook bodes well for NextEra Energy, a leader in solar. FPL has installed over 7.9 GW of solar to capture Florida's abundance of sunshine and help meet the state's power needs. That's the largest utility-owned solar portfolio in the country. FPL plans to deploy more than 17 GW of solar and over 7.6 GW of battery storage in the next 10 years to meet the state's power needs. In addition, NextEra's energy-resources segment has 28 GW of renewable energy projects under development that it expects to bring online over the next few years. The company plans to invest a staggering $120 billion over the next four years into maintaining and expanding America's energy infrastructure. This investment should power adjusted EPS growth at or near the top end of its 6% to 8% annual target range through 2027. That should give the company the power to continue growing its dividend (which at an over 3% yield is more than double the S&P 500's -1.5% yield) by around 10% annually through at least next year. Given the expected surge in power demand, the company should have ample opportunities to continue growing at a strong rate well beyond that time frame. NextEra Energy is a leader in the U.S. energy sector. That puts it in a strong position to capitalize on the expected surge in power demand over the next couple of decades. The company has an exceptional record of investing money to grow its business in a way that generates strong returns for shareholders. Because of that, I wouldn't hesitate to buy shares of this top energy stock in June. Before you buy stock in NextEra Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and NextEra Energy wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor's total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Matt DiLallo has positions in NextEra Energy. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy. 1 Top Energy Stock I Wouldn't Hesitate to Buy in June was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
a day ago
- Business
- Globe and Mail
A 300% Increase in AI Data Center Demand Will Propel Growth for These 3 High-Yield Stocks
Artificial intelligence (AI) isn't technically a living thing, even though it can seem like one at times. The truth is, if you stop providing electricity to the hardware that supports any AI system, it ceases to operate. And that's the big story behind the growth opportunity ahead for NextEra Energy (NYSE: NEE), Dominion Energy (NYSE: D), and Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). Each of these high-yield stocks offers investors a way to profit from growth in the AI space without having to try to pick an AI winner. NextEra Energy is growing its dividend 10% a year At its current share price, NextEra Energy has a 3.2% dividend yield. That compares to a 1.3% average yield for stocks in the S&P 500 index and the 2.9% yield of the average utility. You can find utilities with higher yields, but NextEra's is relatively attractive. The real story here, however, is dividend growth. Management has boosted NextEra's dividend at a 10% annualized clip over the past decade, and it expects to continue doing so at about that rate over the next couple of years. Its payout growth has been supported by the utility's steadily growing regulated business in Florida and, more to the point, its fast-growing clean energy business. The clean energy business sells power to other companies under long-term contracts. Large companies are increasingly looking for clean energy solutions as they expand, including the technology companies that are powering the AI revolution. And AI-related electricity demand in the United States is projected to increase by 300% over the next decade or so. Dividend growth investors looking for a way to tap into the AI sector while still maximizing yield will want to do a deep dive on NextEra Energy today. Dominion Energy is getting its business on the right track Dominion Energy is a turnaround story, and the stock could be appealing to investors who don't mind taking on just a little extra risk for a lot more yield. The regulated electric utility's yield at the current share price is around 4.7%, which is well above the industry norm. The risk here, however, is pretty low, given the company's government-granted monopolies in the regions it serves. One of those regions, Virginia, happens to be among the largest data center markets in the world. Add in a large offshore wind farm Dominion is building in the state, and it seems well-positioned to take advantage of the added demand that AI will create. The problem here is that the utility is currently focused on strengthening its balance sheet, which in part entails reducing its dividend payout ratio to bring it back in line with its peers. Basically, expect dividend growth at Dominion Energy to be on hold for at least a couple of years. However, investors who buy today will get a well-above-average yield, which seems ample compensation for income seekers as they await the stock's return to dividend growth in the future. Brookfield Renewable is a global play At the current share price, Brookfield Renewable Partners yields 6.2%. The company also has a roughly identical corporate share class with a lower 5% yield, a function of the higher demand for those shares. As the name implies, Brookfield Renewable invests in renewable power assets such as hydroelectric, solar, and wind, as well as battery storage and nuclear power. Unlike NextEra and Dominion, Brookfield Renewable operates on a global scale, allowing it to take advantage of AI and data center demand wherever it is popping up. For example, Brookfield Renewable has inked a deal with Microsoft to provide the tech giant with 10.5 gigawatts of new renewable power over the next decade. The purpose of the deal is specifically to support Microsoft's data center expansion. This shows what Brookfield Renewable's globally diversified portfolio can support. Investors should take a serious look at the high-yield opportunity here. AI is a growth driver for electricity demand Wall Street is excited about artificial intelligence and its rapid development, but many investors are focusing specifically on the direct AI plays. It's always tough to accurately pick long-term winners in fast-changing emerging markets. However, it is pretty clear that no matter which AI companies wind up the big winners, they will all need reliable access to growing supplies of electricity. And that means that high-yield stocks like NextEra Energy, Dominion Energy, and Brookfield Renewable are likely to be winners from the AI revolution, too. Should you invest $1,000 in Dominion Energy right now? Before you buy stock in Dominion Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dominion Energy wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor 's total average return is987% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
