{"id":59497,"date":"2024-06-22T06:00:09","date_gmt":"2024-06-22T10:00:09","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=59497"},"modified":"2024-08-19T09:03:37","modified_gmt":"2024-08-19T13:03:37","slug":"chevron-vs-nextera-energy-which-dividend-stock-is-the-better-buy","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2024\/06\/chevron-vs-nextera-energy-which-dividend-stock-is-the-better-buy\/","title":{"rendered":"Chevron vs. NextEra Energy: Which Dividend Stock is the Better Buy?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Despite the industry challenges,<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_CVX\"> <span style=\"font-weight: 400;\">Chevron Corporation (CVX)<\/span><\/a><span style=\"font-weight: 400;\"> and<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_NEE\"> <span style=\"font-weight: 400;\">NextEra Energy, Inc. (NEE)<\/span><\/a><span style=\"font-weight: 400;\"> are both gaining significant traction and rewarding shareholders with reliable dividends. But if you had to choose between them, which would be the better buy?<\/span><\/p>\n<p><b>Chevron's Dividend Strength Over 37 Years<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Chevron is one of the largest integrated energy majors globally, with operations spanning oil production, transportation, and processing. This strategic spread helps cushion the inherent volatility in oil and gas markets, ensuring stability and sustained growth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Recently,<\/span><a href=\"https:\/\/www.reuters.com\/markets\/commodities\/oil-inches-up-war-jitters-outweigh-surprise-build-us-crude-stocks-2024-06-19\/\"> <span style=\"font-weight: 400;\">oil prices dipped<\/span><\/a><span style=\"font-weight: 400;\"> after hitting seven-week highs. Brent crude futures slipped to $85.27 a barrel, while U.S. West Texas Intermediate crude dropped to $81.47 per barrel. Despite the cyclical nature of the oil sector, Chevron\u2019s solid operational and financial performance continues to shine through.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In its<\/span><a href=\"https:\/\/chevroncorp.gcs-web.com\/static-files\/d6e0b7a2-bc43-42cf-aa0b-56ee0eedb3b0\"> <span style=\"font-weight: 400;\">latest earnings release<\/span><\/a><span style=\"font-weight: 400;\">, the company reported a double-digit increase in worldwide production and returned $6 billion in cash to shareholders. CVX beat first-quarter earnings estimates, with an adjusted EPS of $2.93, surpassing analysts' expectations of $2.87. U.S. production surged to 1.57 million barrels of oil and gas per day, a 35% increase from a year ago, thanks to strong output from the Permian and Denver-Julesburg basins.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What truly sets Chevron apart is its financial muscle. The company\u2019s debt-to-equity ratio is a mere 0.12, the lowest among its peers. This low leverage gives CVX the flexibility to support its operations and sustain its dividends even during downturns, providing a significant competitive advantage.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the first quarter of 2024, Chevron\u2019s return on capital employed exceeded 12%, reflecting efficient management and strategic investments. The company increased its quarterly dividend by 8% sequentially to $1.63 per share and repurchased nearly $3 billion worth of its shares.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With 36 consecutive years of dividend growth and a forward dividend yield of 4.16%, Chevron offers investors a compelling mix of income and growth potential. CVX has a four-year average yield of 4.35%, and its dividend payouts have grown at a CAGR of 6.4% over the past three years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, the company aims to grow its annual free cash flow (FCF) by nearly<\/span><a href=\"https:\/\/www.chevron.com\/newsroom\/2023\/q1\/chevron-reaffirms-higher-returns-lower-carbon-objectives\"> <span style=\"font-weight: 400;\">10% through 2027<\/span><\/a><span style=\"font-weight: 400;\">, even if Brent crude prices fall to $60 per barrel. With Brent crude currently around $83 per barrel, Chevron has ample room for growth. CVX\u2019s strategy focuses on improving ROCE by investing in high-return areas like the Permian Basin, expected to drive substantial cash flow growth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Increasing cash flow and robust dividend growth make CVX an attractive long-term investment. The company\u2019s ability to navigate market fluctuations and maintain financial stability positions it as a top choice for investors seeking security and growth in the energy sector. Shares of CVX have gained over 4% over the past six months and nearly 5% year-to-date.<\/span><\/p>\n<p><b>How Is NEE Positioned to Reward Shareholders?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">NextEra Energy is a dual force in the energy sector, uniquely positioned with substantial operations in regulated utilities and renewable energy. As one of the largest regulated utility companies in the U.S., NEE enjoys stable earnings through its main subsidiary, Florida Power &amp; Light (FPL).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">FPL's recent expansion efforts, including the addition of 1,640 megawatts of new solar capacity, underscore its commitment to clean energy and meeting the growing electricity demands. In the<\/span><a href=\"https:\/\/www.investor.nexteraenergy.com\/~\/media\/Files\/N\/NEE-IR\/news-and-events\/events-and-presentations\/2024\/04-23-24\/2024-0423%20NEEQ12024News%20Release%20Final.pdf\"> <span style=\"font-weight: 400;\">first quarter<\/span><\/a><span style=\"font-weight: 400;\"> that ended March 31, 2024, FPL reported a net income of $1.17 billion or $0.57 per share, reflecting an increase of 9.5% and 7.5% year-over-year, respectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Simultaneously, NextEra Energy Resources, the company's renewable energy arm, continues to advance in sustainable energy production. The segment had a record quarter, adding approximately 2,765 megawatts of new renewables and storage projects to its backlog. Its adjusted earnings for the quarter were $828 million and $0.40 per share, up from $732 million and $0.36 per share in the first quarter of 2023.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Financially, NEE's performance remains robust. During the quarter, the company\u2019s adjusted earnings amounted to $1.87 billion or $0.91 per share, reflecting an increase of 11.6% and 8.3%, respectively. Its adjusted EBITDA was $462 million, and $164 million cash was available for distribution. Moreover, its revenue and EPS have grown at respective CAGRs of 16.6% and 20.2 over the past three years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Looking forward, NEE sees significant growth potential in the U.S. renewables and storage market, expecting it to triple over the next seven years from 140 gigawatts to around 375-450 gigawatts. With an existing 74-gigawatt operating fleet, split between FPL and Energy Resources, the company aims to expand to over 100 gigawatts by 2026, further strengthening its operational scale and creating additional value for its stakeholders.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On June 17, NEE<\/span><a href=\"https:\/\/www.investor.nexteraenergy.com\/news-and-events\/news-releases\/2024\/05-23-2024-221820771\"> <span style=\"font-weight: 400;\">paid<\/span><\/a><span style=\"font-weight: 400;\"> its shareholders a quarterly dividend of $0.52 per share. With 28 consecutive years of dividend growth and a forward dividend yield of 2.84%, NEE offers an attractive proposition for income-oriented investors seeking exposure to the clean energy sector. Also, it has a four-year average dividend yield of 2.23% and has grown its dividend payouts at a CAGR of 10.2% over the past three years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">All said, NEE stands at the forefront of the energy transition, leveraging its dual strengths in regulated utilities and renewable energy to drive sustainable growth and value creation. The stock has gained over 21% over the past six months and over 19% year-to-date.<\/span><\/p>\n<p><b>Should You Buy Chevron or NextEra Energy?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Analysts are bullish on these dividend-paying giants, each presenting significant upside potential. So, how do these two stack up?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Mizuho gave Chevron a Buy rating and raised the<\/span><a href=\"https:\/\/www.marketbeat.com\/instant-alerts\/nyse-cvx-consensus-analyst-rating-2024-06-15\/\"> <span style=\"font-weight: 400;\">price target from $200 to $205<\/span><\/a><span style=\"font-weight: 400;\">, implying a substantial 23.59% upside from the current price of $156.64. This sentiment is echoed by other prominent analysts, with HSBC and Scotiabank setting price targets of $178 and $195, respectively. This results in an average price target of $186.95, suggesting a potential 16% upside.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the other hand, NextEra Energy has also caught the eye of analysts. BMO Capital recently maintained an Overperform rating on the stock and raised the<\/span><a href=\"https:\/\/site.financialmodelingprep.com\/market-news\/fmp-nextera-energy%E2%80%99s-price-target-increased-at--bmo-capital-\"> <span style=\"font-weight: 400;\">price target from $78 to $79<\/span><\/a><span style=\"font-weight: 400;\">, suggesting an 8.3% upside from the current price of $72.46.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In terms of dividend yield as a rough measure of value, CVX's 4.2% yield is far more attractive compared to NEE's modest 2.8%. While both stocks historically offered higher yields during oil downturns, NextEra Energy's current yield is comparatively lower. This positions CVX as a stronger income play and suggests it may be the more attractive stock between the two.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Despite the industry challenges, Chevron Corporation (CVX) and NextEra Energy, Inc. (NEE) are both gaining significant traction and rewarding shareholders with reliable dividends. But if you had to choose between them, which would be the better buy? Chevron's Dividend Strength Over 37 Years Chevron is one of the largest integrated energy majors globally, with operations [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":57434,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[34369,32943,34065,32150,34370,32149,34371,34368,34367,34366],"class_list":["post-59497","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-10-through-2027","tag-chevron-corporation-cvx","tag-first-quarter","tag-inc-nee","tag-latest-earnings-release","tag-nextera-energy","tag-oil-prices-dipped","tag-paid","tag-price-target-from-200-to-205","tag-price-target-from-78-to-79"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Chevron vs. NextEra Energy: Which Dividend Stock is the Better Buy? - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"Chevron Corp. 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