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4 Stocks With Healthy Dividend Growth Potential

These utilities feature low payout ratios, solid investment opportunities, and constructive regulatory environments--though they’re not cheap.

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Despite the headwinds posed by COVID-19, utilities continue to have strong growth prospects, healthy financials, and growing dividends. We think the following utilities have the best dividend growth opportunities, boosted by low payout ratios, robust capital investment opportunities, and constructive regulatory environments.

We forecast that NextEra Energy can increase its dividend 11.5% annually over the next five years, well above its peer group average and the highest in our coverage universe. Additionally, its lower-than-average 62% payout ratio gives NextEra greater flexibility to increase its dividend as cash flows grow. Constructive rate regulation in its service territories and long-term renewable energy contracts at NextEra Resources provide additional dividend support.

Morningstar does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.