NextEra Energy Plans to Spend $59 Billion in Annual Capex Through 2032. Will This Massive Capital Outlay Pay Dividends for Shareholders?

NextEra Energy (NEE 0.62%) is already a very large company, with a market cap of $185 billion. With its planned acquisition of Dominion Energy (D 0.91%), a $60 billion market cap competitor, NextEra is looking to get even bigger. The increased scale should help NextEra compete as electricity demand rises, thanks to new technologies such as artificial intelligence, data centers, and electric cars. Here’s why the combined company’s $59 billion in capital spending will be a big growth driver.

The electricity market is changing in a big way

Between 2005 and 2025, electricity demand increased by 10%. Between 2025 and 2045, however, demand is expected to increase by 60%. That’s a step change in an industry historically known for slow growth. NextEra, already one of the world’s largest utilities, sees an opportunity to leverage scale.

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Acquiring Dominion will give it greater access to capital markets and provide a more diverse set of investment opportunities by expanding NextEra’s regulated utility reach well beyond its home state of Florida. Dominion operates in North Carolina, South Carolina, and Virginia. Notably, Virginia is home to one of the world’s most important data center markets, allowing NextEra to lean into this key growth sector.

NextEra has two ways to benefit

NextEra’s regulated utilities must have their capital spending plans and rates approved by the government. So slow and steady is the norm, but given the expected increase in electricity demand, growth is likely to speed up. Meanwhile, NextEra also operates one of the world’s largest contract solar and wind power businesses. That business sells power at market rates, providing an additional growth boost and operating outside the regulated framework. Dominion will increase the company’s scale on both sides of the equation, with capital spending across the entire business expected to hit a massive $59 billion per year.

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$185BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

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$88.42 – $90.72

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36.10%

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2.68%

That spending is expected to support annualized earnings growth of around 9% or more. Without the transaction, NextEra was projecting earnings growth of 8%. A one percentage point increase in growth may not seem material, but it represents an over 12% increase in the growth rate. That’s a notable uptick.

Paying dividends in more ways than one

Basically, NextEra Energy’s bold new capital investment plans, if they work out as hoped, will clearly pay dividends for investors on the growth front. And those plans will also allow the company to maintain its decades-long streak of annual dividend increases. If you are a dividend growth investor, NextEra’s 2.7% yield and plan for annual dividend growth of around 6% should probably put this industry giant on your radar.