A New Era of Growth in the US Power Sector
The US power sector is poised for a dramatic transformation, driven by a surge in electricity demand over the next two decades. This shift presents a significant opportunity for companies that can capitalize on the trend, particularly those with a strong focus on renewable energy.
The Perfect Storm of Growth Drivers
Several factors will contribute to the expected increase in power demand, including the electrification of transportation, the onshoring of manufacturing, and the growing need for digital infrastructure. As a result, the country will require a substantial amount of new electricity-generating capacity, primarily from lower-carbon sources. In fact, estimates suggest that the US will need to build 375-400 gigawatts of new renewable energy capacity over the next seven years alone.
NextEra Energy: A Leader in Renewable Energy
NextEra Energy is well-positioned to capitalize on this trend, with its significant scale and expertise in developing renewable energy capacity. The company currently operates 38 gigawatts of renewable energy and storage capacity across its electric utility, Florida Power & Light (FPL), and energy resources segments. With a backlog of 24 gigawatts of projects and contracts to build an additional 10.5 gigawatts of capacity, NextEra Energy is poised to more than double its renewables and storage capacity by 2027.
A Recipe for High-Powered Returns
NextEra Energy’s investments are expected to generate strong total returns for investors, with adjusted earnings per share growth at or near the top end of its 6-8% annual target range through 2027. The company also plans to increase its dividend by around 10% annually through 2026, providing a attractive yield for investors.
Brookfield Renewable: A Global Leader in Renewable Energy
Brookfield Renewable is another company with the scale and expertise to capitalize on the expected surge in power demand. With 37 gigawatts of operating capacity across the world, Brookfield has a significant presence in the US market, having acquired several renewable energy developers in recent years. The company has a staggering 200 gigawatts of projects in various stages of development, including 65 gigawatts in its advanced-stage pipeline.
A Robust Growth Profile
Brookfield Renewable expects to commission an average of 10 gigawatts of capacity annually in the coming years, supporting its robust growth profile. The company believes it can grow its funds from operations per share by more than 10% annually over the next decade, enabling it to increase its dividend by 5-9% per year.
Two No-Brainer Stocks to Buy
NextEra Energy and Brookfield Renewable are two companies with the scale, expertise, and financial capacity to lead the development of new renewable energy capacity in the US. With their strong growth profiles and attractive dividend yields, they offer investors a compelling opportunity to capitalize on the coming power surge.
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