Beat the S&P 500 With This Cash-Gushing Dividend Stock

NextEra Energy (NYSE: NEE) isn't your average utility stock. Most utilities tend to be slower-growing companies known more for paying higher-yielding dividends. As a result, many struggle to beat the S 500. However, while NextEra does pay an above-average dividend (currently yielding 3.4% compared to the S 500's 1.3%), it has a proven ability to deliver market-beating total returns. Over the last decade, the utility has produced a 13.1% average annualized total return, outpacing the S 500's 12.9% total return.

NextEra should have the power to continue outperforming the S 500 in the future. Here's why.

Like most utilities, NextEra Energy generates lots of stable cash flow. In 2023, it produced $11.3 billion in net cash provided by operating activities. It used $3.7 billion of that cash to pay dividends to shareholders. That gave the company a relatively low dividend payout ratio (59% of its adjusted earnings, well below the peer group average of 65%).

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Source Fool.com