The worldwide shift towards renewable energy will provide investors an opportunity to make money hand over fist in the next few decades. A report from Allied Market Research forecasts the global renewable energy market to touch $1.97 trillion by 2030, up from $881.7 billion in 2020, indicating an annual growth rate of 8.4%.
Given the encouraging outlook for this sector, let's see which renewable energy stock between NextEra Energy (NYSE: NEE) and FuelCell Energy (NASDAQ: FCEL) should be part of your portfolio right now.
Headquartered in Florida, NextEra Energy is the largest clean energy company globally. It also owns Florida Power & Light Company, the biggest vertically-integrated rate-regulated electric utility in the U.S. in terms of retail electricity produced and sold. Florida Power & Light serves over 5.7 million customer accounts and supports 11 million residents in the state.
NextEra ended Q1 with an asset base of $145 billion and is currently valued at a market cap of $150 billion. NEE stock has delivered market-beating returns to investors over the long term and has surged close to 500% since July 2012 after adjusting for dividends.
In June, NextEra disclosed the acquisition of a Pennsylvania wastewater system, including a treatment plant serving 7,500 customers. The deal is expected to close in the second half of 2023, further diversifying the company's revenue base.
NextEra aims to expand its adjusted earnings between 6% and 8% in the near term. The expansion in profit margins will also enable NextEra to increase dividend payouts. Right now, NEE stock offers investors a forward yield of 2.23%. The company has raised dividends by 11% annually in the last ten years.
NextEra is expected to spend $55 billion in capital expenditures between 2020 and 2022 to expand its base of cash-generating assets. Most of its cash flows are regulated and predictable, making it one of the safest dividend stocks to own in 2022.
FuelCell Energy provides distributed baseload power platform solutions through its fuel cell technology. Its commercial technology delivers clean and distributed hydrogen and heat, carbon separation, and utilization. The company aims to accelerate investments to develop and commercialize technologies to provide hydrogen and hydrogen-based energy storage, including carbon capture solutions.
It targets large-scale power users as customers with megawatt-class installations. FuelCell also offers sub-megawatt solutions to smaller power consumers in Europe. A single megawatt of electricity can power 1,000 average-sized homes in the U.S.
FuelCell's customer base includes companies, municipalities, universities, hospitals, and other industrial enterprises.
FuelCell ended fiscal 2021 with a cash balance of $432 million, compared to $150 million in
2020 (ended in October). It increased factory production rates to meet backlog requirements and operates at an annualized production rate of 45 megawatts.
In fiscal Q2 of 2022, FuelCell reported revenue of $16.4 million and a loss of $0.08 per share. Comparatively, analysts forecast revenue of $32.6 million and earnings of $0.05 per share in Q2.
Choosing a winner between NextEra Energy and FuelCell Energy is pretty straightforward. NextEra is a renewable energy powerhouse that generates substantial cash flows, pays investors a dividend, and is a company focused on consistent earnings expansion.
While analysts expect FuelCell to increase revenue from $70 million in fiscal 2021 to $150 million in fiscal 2023, it continues to report a negative gross margin, missing earnings estimates in two of the last four quarters.
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