Our latest featured utility sector Growth Spotlight features a compelling combination of attractive investment opportunities and strong cash flow from existing assets, asserts David Dittman, editor of Utility Forecaster.

NextEra Energy (NEE) operations include its Florida Power & Light regulated utility. And its NextEra Energy Resources unit is on track to meet or exceed wind and solar contracted capacity targets for 2013 to 2015 and 2013 to 2016, respectively.

And it plans to accelerate drop-downs to its NextEra Energy Partners LP (NEP) affiliate to maximize its incentive distribution rights by late 2015. IDR payments from the partnership should reach $200 million per year by 2020.

It’s likely that the outcome of the midterm Congressional elections will lead to a slowdown in the wind market in 2016-17 due to tax credit expirations and the pulling forward of projects.

However, the industry’s long-term fundamentals are intact, along with improving technology. And NextEra Energy Resources has other infrastructure investment opportunities that should bridge a potential gap.

NextEra reported adjusted EPS of $4.24 for the first nine months of 2014. Management affirmed 2014 adjusted EPS guidance of $5.15 to $5.35, which should support a dividend increase of 7% to 10% in February 2015. Management established a preliminary 2015 forecast of $5.40 to $5.70.

And during its third-quarter conference call management noted it would be “disappointed” if the company were unable to meet the upper end of its 2016 range of $5.50 to $6.00 per share.

And it expects to see 5% to 7% annual adjusted EPS growth from a 2014 base through 2018.

Its ownership stake in NextEra Energy Partners is a key growth driver. Its leading position in the renewable energy space is another positive.

And its Florida Power & Light unit is a strong franchise, benefitting from a favorable regulatory climate, strong demographics, and solid economic fundamentals.

For these reasons, we’re raising our buy-under target on the stock. NextEra Energy is now a buy under $108.

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