#7 - NextEra Energy (NYSE:NEE)
Of course, one alternative to investing in oil stocks is to invest in renewable energy. And that takes you to NextEra Energy (NYSE:NEE). NextEra derives income from being one of the nation’s largest electric utilities as well as being a world leader in wind and solar power. Because of their regulated rates and fee-based contracts, the company enjoys a predictable and stable income.
Despite the turbulence in the energy sector, NextEra is flat for 2020. And taking a wider view, the stock is up over 25% in the last 12 months. It also has a reliable dividend that is protected by one of the more conservative payout ratios in the industry. Although the stock is close to its consensus 12-month price target, NEE still gets a buy rating from analysts.
As of this writing, NEE stock was pushing up against what appears to be a level of resistance at around $235 per share. If the stock can break through this level, it could signify a new leg up. Even if it doesn’t, investors can pickup a nice dividend.
About NextEra Energy
NextEra Energy, Inc, through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear,natural gas, and other clean energy. It also develops, constructs, and operates long-term contracted assets that consists of clean energy solutions, such as renewable generation facilities, battery storage projects, and electric transmission facilities; sells energy commodities; and owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets.
Read More - Current Price
- $76.00
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $86.85 (14.3% Upside)
Right now may seem like a difficult time to invest in the energy sector. Particularly if you’re only looking at oil stocks. A newsletter that I subscribe to wrote the following description for the current situation in the oil sector:
No one wants to be stuck taking physical delivery of oil without a place to store it.
In a multibillion-dollar game of "hot potato"... professional traders and speculators who held the May futures contracts – what's known as the "front month" contracts – wanted to dump that obligation ahead of expiration. They were willing to sell it at any price... But they couldn't find anyone to accept that burden.
However, the market did what the market tends to do. And at the time of this writing, WTI crude had reached a high of $17.95. And longer-dated futures contracts are trading in the $20 to $25 range. That’s not enough to make many oil stocks profitable, but it’s consistent with the slow, measured approach that it seems like the U.S. will take as they seek to re-open the economy.
Still, energy stocks, and oil stocks, in particular, are likely to be depressed for quite some time. And it’s a real possibility that some companies may not make it to the other side. And that’s why energy stocks are a poor choice for growth investors right now.
However, if you’re an income investor, there are some smart ways to invest in the energy sector. By sticking to stocks such as the ones in this presentation, you can protect, and even grow, your portfolio.
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