Why NextEra Energy’s stock rallies today
What happened
Actions of NextEra Energy (NYSE: NEE) jumped more than 5% at 10:45 a.m. EDT on Tuesday. Feed the stock of utilities was news that he was splitting his stocks and an update on his growth forecast.
So what
NextEra Energy has revealed plans to price its stocks high (stocks are approaching $ 300 apiece after today’s rally) more accessible to the average investor. The utility will adopt a 4-to-1 split, which it plans to complete on October 27. Equity splits have become increasingly popular this year after tech giants like Apple and You’re here made the headlines dividing their stocks, which helped generate more earnings ahead of the recent sell-off in tech stocks.
While NextEra’s stock division will not create any tangible value for investors, its other announcement is expected to do so. The company said it now expects its earnings per share for 2021 to be $ 0.20 per share (pre-split) above its previous forecast. The company also plans to increase its earnings per share in 2022 and 2023 at an annual rate of 6% to 8% from this higher expected base. This updated forecast not only increases its near-term profit outlook, but extends it for another year as well. Strong execution and excellent environment for development fuel faster growth renewable energy projects.
Now what
NextEra Energy has an excellent track record of generating above-average earnings and dividend growth. This fueled a steadily rising trend in its stock price, which put it out of reach for some investors. With the split, more investors will be able to afford stocks. Meanwhile, with its growth forecasts accelerating, this is an even better long-term opportunity for all portfolio sizes.
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