Why Investing $10,000 in NextEra Energy Today Might Just Be a Brilliant Move

Key Points

• NextEra Energy is a company with two businesses.

• The company's regulated utility operations are a reliable foundation.

• NextEra Energy's clean energy division is a growth machine.

• 10 stocks we like better than NextEra Energy ›

If you have $10,000 to invest, a great choice today is NextEra Energy (NYSE: NEE) . That money would buy you approximately 135 shares of what is the largest publicly traded utility in the world, according to recent research by The Motley Fool . But buying NextEra Energy isn't a brilliant move because it is a big utility, it is because it's more than just a utility. Here's what you need to know.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

What does NextEra Energy do?

NextEra Energy's core business is operating a regulated utility in the state of Florida. Florida Power & Light is one of the largest utilities in the United States. It has long benefited from migration to the Sunshine State. More residents means more paying customers. And more paying customers means more need for the capital spending that keeps supply and demand in balance while also ensuring service reliability.

All of that is important because regulated utilities are granted a monopoly in the regions they serve, but the trade off is that they have to consent to government regulation. Simply put, a regulated utility has to get its rates and investment plans approved by the government. This generally leads to slow and steady growth as regulators balance customer costs with reliable supply and investor returns. The regulated utility business that NextEra Energy operates is a solid, though slow-growth, foundation.

There are lots of companies that fall into the regulated utility bucket. What sets NextEra Energy apart is that on top of this business it has built one of the world's largest solar and wind power companies . Other utilities have tried to do the same thing and fallen short. NextEra Energy, in contrast, has turned this business into a growth engine. This division currently operates around 39 gigawatts of capacity with another 30 gigawatts in its construction backlog. In other words, this division's growth is nowhere near over yet.

The proof of how valuable this combination has been for investors comes from NextEra Energy's dividend. Not only has it increased annually for more than three decades, but the annualized dividend increase over the past decade was a huge 10%. That's good for any company, but it is truly outstanding for a utility. In fact, half that rate of dividend growth would be considered very attractive for this sector.

Why buy NextEra Energy now?

The first reason to like NextEra Energy goes back to its growth as a business. The company has ample opportunity to expand on both the regulated and renewable power sides of its operation. And management expects that this will lead to earnings growth of between 6% and 8% a year through at least 2027. The dividend is projected to increase 10% a year through at least 2026.

The company is so confident in its outlook that management actually wrote "We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted EPS expectations ranges through 2027" in a recent corporate presentation. That is a confidence-inspiring statement, but only because management has a history of achieving the kind of success it is predicting.

But opportunity for growth and dividend growth is just piece one of the story. The next important reason why you'll want to buy NextEra Energy today is because it looks like an attractive dividend stock, too. The current dividend yield is nearly 3.2%. The S&P 500 index (SNPINDEX: ^GSPC) is only yielding around 1.2% and the average utility's yield is 2.7%. If you are a dividend investor or a growth-and-income investor, NextEra Energy should be highly attractive to you.

NextEra Energy is a differentiated utility

NextEra Energy is not your typical utility, but that's exactly why the stock is so appealing today. Sure, you can find higher yields or stocks with higher dividend growth rates. But a relatively high yield and a high dividend growth rate are a rare combination. If you are looking for a utility, NextEra Energy should be at the top of your list. But it should probably be at the top of the list for anyone who just loves dividends, too.

Should you invest $1,000 in NextEra Energy right now?

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy .

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"I am highly alarmed by the proposed changes to retirement accounts": I don't want bitcoin or private equity in my 401(k). What can I do?

Dear Quentin,

I am highly alarmed by the proposed changes to retirement accounts. How do I keep my retirement out of harm's way?

Historically, the Employee Retirement Income Security Act of 1974 held plan administrators to a strict fiduciary standard. Following an August 2025 executive order signed by President Donald Trump, the Trump administration and the private-equity industry are taking steps to allow private equity to be included in retirement accounts.

Supporters argue that it would give everyday investors access to the same higher-yield assets that have traditionally only been available to institutional investors and the very wealthy. To my ears, the pitch is "come play with the high rollers of Wall Street and we will promise you the moon." My motto for decades has been slow and steady mutual funds.

Allowing bitcoin and private equity into my portfolio is a hard no. What are the options for safeguarding my autonomy over my funds?

Retiree

Related: "It's keeping me up at night": My brother sold his share of the family farm and lost the rest in a divorce. He says I owe him.

You can email The Moneyist with any financial and ethical questions at qfottrell@newsrealtime . The Moneyist regrets he cannot reply to questions individually.

Dear Retiree,

The main thrust of your letter is indeed correct. Last month, Trump signed an executive order titled "Democratizing Access to Alternative Assets for 401(k) Investors," which would allow the U.S. Department of Labor and other federal agencies to create more exposure for "alternative assets," including private equity, real estate, and digital assets, for defined-contribution retirement plans.

The White House states that fiduciaries of 401(k) and other defined-contribution retirement plans "must carefully vet and consider all aspects of private offerings, including investment managers' capabilities, experiences, and effectiveness managing alternative asset investments. They do so to protect the Americans whose retirement accounts they administer and for whom they have fiduciary duties to invest safely and prudently."

An important caveat: The executive order is designed to provide guidance and does not itself constitute a piece of legislation. Instead, it directs the Securities and Exchange Commission to consult with the Department of Labor to explore more ways to allow 401(k) plan participants to have greater access to alternative assets. The Department of Labor may issue proposed legislation and invite members of the public to comment.

The executive order is designed to provide guidance and does not itself constitute a piece of legislation.

Law firm Cleary Gottlieb recently advised investors to wait and see how the Department of Labor and the SEC respond. "We expect to see an increase in partnerships between private funds, investment managers and traditional 401(k) platform providers," it says. "We may also see a greater number of plan fiduciaries willing to provide participants with access to alternative assets (including private funds) through managed accounts within 401(k) plans."

Regarding your point, it is more likely that you will be given the option of how you would like your retirement funds to be invested, if and when there is more cooperation between private funds, investment managers, and traditional 401(k) providers. "These managed accounts typically require participants to opt-in, thus creating a natural avenue to ensure appropriate disclosures are provided and to mitigate claims from 'unknowing' participants," Cleary Gottlieb says.

The problem for retirees and retail investors like yourself and millions of other Americans is one of transparency, low volatility and low liquidity. When you invest in the Dow Jones Industrial Average, S&P 500, or Nasdaq, stocks are openly traded. Private equity, however, puts money in private firms that are not legally required to offer shares or detailed financial accounting to the wider public. You can read more about the implications of the executive order here .

It could take years for this to actually happen, so do not panic. "While that [executive order] may ultimately result in retirement-plan fiduciaries choosing to include alternative investment options within the plans they oversee, you should take some solace in the fact that plan administrators will continue to be held to a fiduciary standard, and it should not limit your access to more traditional investment choices," says Martin Schamis, head of wealth planning at Janney Montgomery Scott in Philadelphia.

Diversification is the ultimate goal

You should continue to have access to a selection of investment choices to build a suitably diversified portfolio within your retirement plan even if alternatives are added to the lineup," Schamis adds. "We generally suggest you work with a professional to determine the appropriate allocation for your situation. Traditionally speaking, your target allocation should include broad asset classes consisting of domestic and international equities and fixed income.

Diversification is, for the most part, a positive thing for your retirement funds, and this provides a new outlet for retail investors. "Alternative assets, including private equity, real estate, commodities, and other investments can provide additional diversification within a portfolio, both serving to reduce risk and potentially increasing return," he says. "The traditional hurdle for most investors in accessing these investments has been one of scale and costs."

Talk to your adviser about these options. "If one outcome of this order is to broaden access at reasonable cost to nontraditional investments, it is possible that including them in your overall allocation could result in a better-diversified portfolio," Schamis says. "And in any event, you should continue to have control over your own allocation, along with a broad selection of traditional investment options to build the appropriate portfolio."

Some argue that retail investors are at a financial disadvantage compared with wealthy institutional investors.

Mayer Brown, an international law firm, outlined some of the aspects of this executive order, and its limitations, which may put your mind at ease — at least for now. "The order does not change existing law regarding the types of investments that may be offered in a defined contribution plan. Investment products that include private market assets have been around for nearly two decades," the law firm says.

Nor does the order suggest that private market assets should be offered as standalone investments in plan investment lineups. Rather, the order recognizes that private market assets are typically offered as part of a custom target-date fund, a multi-asset class fund, or as part of an account that is managed by a sophisticated investment manager," it adds. "The order recognizes that retirement investing appropriately considers the long-term time horizon.

The order also aims to address excessive fee litigation and wants the Department of Labor to help fiduciaries and plan sponsors comply with their obligations when navigating alternative investment products, Mayer Brown adds. "The order opens the path for DOL to issue new regulations and guidance that may help curb some of this litigation, including providing certain protections for plan sponsors and fiduciaries who consider private market assets," it says.

Most retail investors and employer-based retirement plans do not have exposure to private equity within their 401(k) plans, which some experts argue puts most Americans at a financial disadvantage compared with wealthy institutional investors and those who participate in public-pension plans. But in any case, there is a long regulatory process ahead before you can expect to see any possible changes to your 401(k)'s exposure to alternative assets.

Previous columns by Quentin Fottrell:

I'm 67. My wife, 48, is financially illiterate. How do I teach her to manage our money? After all, I won't be around forever.

"He is increasingly angry": My troubled son lives with me. How do I ensure he is financially secure after I die?

"I am my mother's caregiver": My mom, 93, added my name to her retirement accounts. Will she qualify for Medicaid?

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