NEE vs XEL: Dividend Yield, Growth & Safety Comparison
Nextera Energy Inc (NEE) and Xcel Energy Inc (XEL) are both in the Utilities sector, making them natural rivals for dividend investors. XEL edges ahead on yield at 2.94% versus NEE's 2.49%. For dividend growth, XEL leads with a 5-year CAGR of 11.5% versus NEE's 10.2%. Both stocks carry a "Moderate" dividend safety rating. NEE is a Dividend Aristocrat with 30 years of consecutive increases.
Key Metrics Comparison
| Metric | NEE | XEL |
|---|
| Dividend Yield | 2.49% | 2.94% |
| Annual Dividend | $2.27 | $2.28 |
| 5-Year CAGR | 10.2% | 11.5% |
| Payout Ratio | 69% | 67% |
| Consecutive Years | 30 | 1 |
| Price | $93.81 | $81.32 |
Yield Comparison
Xcel Energy Inc (XEL) currently yields 2.94%, which is solid for the broader market. That's 0.45% more than Nextera Energy Inc (NEE), which yields 2.49%. In dollar terms, XEL pays $2.28/share annually versus NEE's $2.27/share.
Dividend Growth
Over the past five years, XEL has grown its dividend at a 11.5% CAGR compared to NEE's 10.2%. NEE: Dividend growth has been steady, with a 3-year CAGR of 10.1% and a 5-year CAGR of 10.2% (10-year: 11.2%). XEL: Dividend growth is accelerating — the 3-year CAGR of 16.6% exceeds the 5-year rate of 11.5% and the 10-year rate of 8.5%.
Dividend Safety
NEE's dividend safety is rated "Moderate." The payout ratio of 69% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.4x. XEL's dividend safety is rated "Moderate." The payout ratio of 67% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.5x. Both have similar payout ratios — NEE at 69% and XEL at 67%.
Income Comparison
A $10,000 investment in XEL generates approximately $294/year in dividend income, compared to $249/year from NEE — a difference of $45/year. At $100,000, that gap widens to $450/year.
Verdict
- Best for income: XEL
- Best for growth: XEL
Frequently Asked Questions
Which has a higher dividend yield, NEE or XEL?
Xcel Energy Inc (XEL) has a higher dividend yield of 2.94% compared to Nextera Energy Inc (NEE) at 2.49%.
Is NEE or XEL a better dividend growth stock?
Xcel Energy Inc has the stronger dividend growth with a 5-year CAGR of 11.5%, compared to Nextera Energy Inc's 10.2%.
Which is safer for dividend income, NEE or XEL?
Nextera Energy Inc's dividend safety is rated "Moderate" while Xcel Energy Inc is rated "Moderate." The payout ratio of 69% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.4x. The payout ratio of 67% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.5x.
How much income does $10,000 in NEE vs XEL generate?
A $10,000 investment in NEE generates approximately $249/year in dividends, while the same amount in XEL generates about $294/year.
Is NEE or XEL a Dividend Aristocrat?
Nextera Energy Inc is a Dividend Aristocrat with 30 consecutive years of increases. Xcel Energy Inc does not currently qualify for aristocrat status.
Which has a lower payout ratio, NEE or XEL?
Xcel Energy Inc has a lower payout ratio of 67% compared to Nextera Energy Inc's 69%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
NEE vs XEL: which is better for retirement income?
It depends on your priorities. XEL for current income, XEL for dividend growth. Many retirement investors hold both for diversification.
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