The Smartest Dividend Stocks to Buy With $100 Right Now

Key Points

• NextEra Energy expects to grow its earnings towards the top end of its 6% to 8% annual target range through 2027.

• Brookfield Renewable anticipates delivering double-digit compound annual earnings growth through the end of the decade.

• They should have plenty of power to continue increasing their high-yielding dividends.

• 10 stocks we like better than NextEra Energy ›

Surging demand for electricity, driven by the rise of AI data centers, increasing onshoring of manufacturing, and the expansion of electric vehicles, is set to reshape the global power landscape in the coming decades. U.S. power demand alone could rise 55% by 2040, requiring significant additional energy generation capacity.

That should benefit companies focused on building out new power-generating capacity. Two of the industry's leaders are NextEra Energy (NYSE: NEE) and Brookfield Renewable (NYSE: BEPC)(NYSE: BEP). Their heavy investment in expanding their power production capacity should provide them with more fuel to grow their high-yielding dividends. That combination of growth and income makes them look like some of the smartest dividend stocks to buy with $100 these days.

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High-end growth through at least 2027

NextEra Energy is one of North America's largest electric power and energy infrastructure companies. It owns FPL, the largest U.S. electric utility, and its energy resources segment is a major power producer. NextEra is a leader in producing and developing renewable energy.

FPL has the largest utility-owned solar energy portfolio in the country at around 8 gigawatts (GW). The company plans to add another 17 GW of solar and 7.6 GW of battery storage across its service territory over the coming decade to meet Florida's growing power needs, increasing its solar generation from 9% of the total to 35%.

Meanwhile, NextEra's energy resources segment anticipates developing between 36.5 GW and 46.5 GW of new renewable energy capacity by 2027 to support the needs of other utilities and large corporations. It sees significant growth potential beyond that timeframe due to the surging need for power in the coming decades.

These catalysts support the company's expectation that its adjusted earnings per share will grow at or near the top end of its 6% to 8% annual target through 2027. This projected earnings growth underpins its plan to deliver around 10% annual dividend growth through at least next year, adding to a payout that already yields more than 3%. NextEra Energy has managed to increase its dividend for over 30 consecutive years, a streak that's showing no signs of stopping.

Powerful growth through the end of the decade

Brookfield Renewable is a leading global renewable energy producer with a diversified portfolio that spans hydro, wind, solar, and energy storage. Brookfield sells 90% of the power it produces under long-term contracts with an average remaining term of 14 years, most of which index rates to inflation (70% of its revenue).

Brookfield's existing power portfolio should deliver 4% to 7% annual growth in its funds from operations (FFO) per share through 2029, powered by inflation-driven rate increases and margin enhancement activities. The company also has a nearly 230 GW development pipeline, including 74 GW in its advanced-stage pipeline. Brookfield expects development projects will add another 4% to 6% to its FFO per share each year through the end of the decade.

Additionally, Brookfield routinely invests capital to acquire interests in other renewable energy platforms. For example, the company agreed to acquire National Grid Renewables earlier this year, adding 3.9 GW of operational and under-construction assets, as well as over 30 GW of future development projects. Brookfield also agreed to invest up to $1 billion to increase its equity interest in Colombian hydroelectric producer Isagen to 38%. The company expects the deal to boost its FFO per share by around 2% next year.

The company expects these drivers to combine to deliver more than 10% compound annual growth in its FFO per share through the end of the decade and beyond. This anticipated FFO per share growth underpins Brookfield's plan to increase its more than 4%-yielding dividend by 5% to 9% each year. The company has grown its dividend at a 6% compound annual rate since 2001.

Smart ways to generate growing dividend income from the energy sector

The world will require significantly more power in the coming years, preferably from cleaner sources such as renewable energy. That plays right into the strategies of NextEra Energy and Brookfield Renewable, which are leaders in producing and developing renewable energy. They should have the power to generate strong earnings and dividend growth rates, making them look like wise places to invest $100 into right now.

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Matt DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, and NextEra Energy. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and National Grid Plc. The Motley Fool has a disclosure policy.