Brookfield vs NextEra Energy Which Is a Smarter Choice?

Brookfield and NextEra Energy are two leading companies in the energy sector, but they have different approaches and strategies when it comes to investing in renewable energy. Brookfield, a global asset manager, has a diversified portfolio that includes energy infrastructure assets. On the other hand, NextEra Energy is the largest renewable energy company in the US, with a focus on wind and solar power generation. Both companies have seen growth in their stocks, but investors should carefully consider their individual strengths and weaknesses before making a decision.

Brookfield or NextEra Energy?

When comparing Brookfield and NextEra Energy, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Brookfield and NextEra Energy.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Brookfield has a dividend yield of 0.41%, while NextEra Energy has a dividend yield of 2.78%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Brookfield reports a 5-year dividend growth of -10.22% year and a payout ratio of 71.80%. On the other hand, NextEra Energy reports a 5-year dividend growth of -15.88% year and a payout ratio of 59.48%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Brookfield P/E ratio at 98.27 and NextEra Energy's P/E ratio at 21.90. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Brookfield P/B ratio is 1.92 while NextEra Energy's P/B ratio is 3.04.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Brookfield has seen a 5-year revenue growth of 0.59%, while NextEra Energy's is 0.57%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Brookfield's ROE at 2.00% and NextEra Energy's ROE at 14.24%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $58.40 for Brookfield and $73.35 for NextEra Energy. Over the past year, Brookfield's prices ranged from $35.72 to $62.44, with a yearly change of 74.80%. NextEra Energy's prices fluctuated between $53.95 and $86.10, with a yearly change of 59.59%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.