Mike Zaccardi, CFA, CMT

The biggest holding in the XLU sector ETF, NextEra, rallied 5% on Wednesday following release first quarter earnings. NextEra’s adjusted earnings per share increased about 8% versus the prior-year’s comparable quarter, though the company noted risks as COVID-19 impacts will likely be seen to a large extent in Q2 2020. Adjusted EPS was $2.38 in Q1 versus $2.20 last year.

NextEra is optimistic that they can maintain adjusted EPS growth of 6-8% through 2022, however. The company signaled an expectation of 12% dividend growth this year and 10% thereafter, through 2022. On the balance sheet, management touted strong liquidity with debt maturities in 2022 and 2025 and a cash position that increased by $6.6 billion due to recent capital market activities. From a credit rating perspective, NEE has an A- rating from S&P, Baa from Moody’s and A from Fitch. The A- rating from S&P ranks in the third of S&P 500 companies.