This Utility Has Raised Its Dividend for 31 Straight Years. Here's the 1 Number I'd Check Before Buying.

NextEra Energy has increased its dividend for 31 consecutive years, positioning it as a dependable dividend-growth stock in the utility sector. The company anticipates raising its dividend by roughly 10% annually through 2026, with annual increases of around 6% in 2027 and 2028. However, before investing, one crucial number to examine is the dividend payout ratio.

This ratio indicates the proportion of a company's earnings allocated to dividend payments, with a lower ratio offering more flexibility for dividend growth and reinvestment in the business. NextEra's forward payout ratio, based on its 2026 adjusted earnings guidance of $3.92 to $4.02 per share, ranges between 62% and 64%. This level is considered sustainable for a regulated utility, particularly one with the growth prospects NextEra possesses.

Nonetheless, the company faces significant capital expenditure demands due to increasing electricity demand and ongoing investments in new generation, transmission, and infrastructure. Consequently, a higher payout ratio might eventually hinder dividend growth if earnings do not keep pace with these investments. NextEra's advantages include a lengthy track record of dividend increases and a business poised to benefit from rising electricity demand.

Management aims for adjusted earnings-per-share growth of at least 8% annually through 2035. If NextEra achieves this growth while maintaining its current payout ratio, its dividend should continue to increase well into 2036.