Hey everyone, Joshua Rodriguez, founder and CEO of CNA Finance, the parent company to Alpha Stock News, here. Recently, I’ve decided to start sharing my portfolio with my readers. If you want to check it out, click here. Tonight (11/17/2020), I’m letting you in on the move I have placed an order for that will be filled during premarket trading tomorrow. I’m buying NextEra Energy (NYSE: NEE), allocating 10% of my portfolio’s capital to the move.
The move will be funded by profits made in my most recent calls with American Airlines (NASDAQ: AAL), and Carnival Corp (NYSE: CCL). To learn more about these moves, check out my portfolio. Nonetheless, I’m excited about an entrance into NEE stock for multiple reasons:
NEE Stock Provides A Level Of Stability
In most cases, like most investors, I’m looking to generate as much profit as humanly possible from the market. However, it’s also nice to mix in stable plays from time to time to dial down on risk and take a breather. NextEra Energy is the largest electric utility in the United States, offering the stability I’m looking for.
Think about it, electricity is something that Americans aren’t willing to live without. We are used to heaters in the winter, air conditioning in the summer, and the ability to flip a switch and see at night. As a result, NEE stock sees strong performance, even in times of unsettling economic conditions.
While I believe that we will continue to see an economic expansion throughout the United States’ recovery from the COVID-19 pandemic, I also believe that in about 18-24 months, economic development will hit a brick wall as the high cost of stimulus becomes more immediately apparent. While this is by no means a short term concern, it is something to think about and allocating a small percentage of my portfolio to a relatively safe bet just seems right.
NextEra Energy Will Benefit Greatly From A Joe Biden Presidency
Recently, we the people of the United States elected Joe Biden to be the next President of the United States. Any change in White House occupancy will lead to movements in the stock market. That fact will likely be exacerbated as a result of a Biden presidency.
At the moment, the global environment is at a pivotal point. With temperatures rising, natural disasters worsening, and more of the same to come if something doesn’t change, going green has become a major topic. Throughout the past several years, Joe Biden has been clear about his view that there is a dire need for regulatory policy to push the United States toward green energy and away from the burning of fossil fuels.
So, what does this have to do with NEE stock? EVERYTHING!
NextEra Energy isn’t just the United States’ largest electric utility provider, it’s also the largest wind and solar power producer in the country. Here are a few things you should know:
Wind Energy
NEE is one of the world’s largest generators of renewable wind energy, with the largest wind energy capacity in North America, and the company continues to make substantial investments in the space. In fact, over the past 10 years, the company has tripled its wind energy holdings.
Today, the company operates more than 14,100 MW of emissions-free wind energy with plans to continue its expansion. In fact, in 2020 and 2021, the company will bring 5,500 MW of wind energy online.
Solar Energy
NEE is also a major player in solar energy in the United States. In fact, FPL, the company’s subsidiary, is Florida’s largest generator of solar energy. It currently owns 28 major solar power plants along with several other solar installations that produce a total of around 2,000 megawatts of solar energy.
The company’s current solar capacity totals more than 2,600 megawatts. In 2020, the company has brought 10 new solar energy centers online and has plans to continue its expansion.
So, back to the President Biden topic. Regardless of which side of the coin you were on in the voting booth, the fact of the matter is that with NextEra Energy being such an integral player in the clean energy market in the United States, the company is likely to benefit greatly from regulatory changes under the Biden Administration. Some of the most important changes I’m expecting to see include:
- Tax Perks. Under the Biden Administration, both, companies that produce clean energy products and consumers that take advantage of them are likely to benefit from tax discounts as a result.
- Grant Funding. When the government gets behind a movement, we tend to see quite a bit of grant funding flowing into the leaders of the space the movement is centered around. With NEE is being the largest player in clean energy in the United States, it’s likely to benefit from potential grants put in place under the Biden Administration.
- Clean Energy Marketing Campagins. Joe Biden is adamant about the need for an improved energy infrastructure that will lead to environmental improvement, rather than harm. Making a big change in the energy space will take quite a bit of consumer awareness. As a result, I wouldn’t be surprised to see marketing campaigns funded by the United States government, urging consumers to go green and investors to support companies in the clean energy sector. Ultimately, this will benefit NEE.
Dividends
There’s no denying the fact that NextEra Energy is far from the highest dividend payer in the energy and utilities sector. With a dividend yield of under 2%, the company’s dividend is actually quite a bit below par for the space.
However, I don’t view NEE stock as a dividend play. I’m actually expecting to see pretty momentous growth out of the stock over the next two to three years. So, what I’m in it for is this growth. However, the dividends are some sweet icing to add to the cake.
The Bottom Line
Utilities aren’t generally a place I look for opportunities. However, with NextEra Energy is far more appealing the the general utilities stock in my view. Not only does the fact that the company is the largest electric utilities provider in the United States provide stability, the company’s stronghold of the clean energy space in the United States will likely lead to major benefits as Joe Biden moves into the White House. Add a few dividend payments here and there in and we have a winner.
As a result, I’m allocating 10% of my portfolio to NEE. Want to see the rest of it? Click here!
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