An energetic idea

NextEra Energy (NYSE: NEE) is a mixture of a regulated utility (it owns Florida Power & Light, the largest U.S. utility) and a clean-energy business.

Over the past 15 years, this combination has led to average annualized growth in adjusted earnings per share of 8.4%.

That’s an impressive number, since utility stocks are generally thought of as slow and steady performers.

NextEra also lays claim to being Earth’s largest producer of solar and wind power, and it aims to roughly double this capacity within three years.

Solar and wind are real growth businesses for the company, which plans to spend as much as $95 billion on capital investments between 2022 and 2025 (while increasing storage capacity as much as eightfold).

Some near-term headwinds, including supply chain disruptions and tariff issues, have caused investor concerns and pushed the shares lower; they recently sat nearly 16% below their 52-week highs.

Over the past decade, though, shares have risen by more than 18% annually, on average (20% with dividends reinvested).

If you like the long-term clean-energy prospects here, give NextEra Energy a closer look.

The stock’s dividend yield is modest, recently at 1.9%, but that payout has been increased at an annual average rate of around 11% over the past decade. (The Motley Fool owns shares of and has recommended NextEra Energy.)

Ask the Fool

Q. What’s a “poison pill” in the business world? – H.L., Denver

A. It’s a strategy, often labeled something like a “limited duration shareholder rights plan,” that companies occasionally employ to deter takeover attempts.

The threat of it alone can be enough to send would-be acquirers packing.

As an example, in 2012, activist investor Carl Icahn bought up 9.98% of Netflix shares, apparently positioning himself to start calling for changes at the company.

Netflix responded by implementing a poison pill strategy that would be triggered once a single investor owned 10% of shares (or an institutional investor owned 20%).

At that point, the company would flood the market with additional shares, available at a discount to shareholders other than the would-be acquirer.

That would have significantly diluted the value of Icahn’s shares. Icahn called the move “really reprehensible,” and later began selling many shares, abandoning his pursuit of Netflix.

Q. Is it OK to have several IRA accounts? – B.B., Scappoose, Oregon

A. Sure. You might invest some money in a traditional IRA and also have a Roth IRA. (They offer different tax benefits, with the former giving you an upfront tax break and the latter the possibility of tax-free withdrawals in retirement.)

If you change jobs, you might take whatever 401(k) money you’ve accumulated and roll that into a new IRA account so that you can manage and invest that sum separately.

As long as you can keep track of the accounts, it’s fine.

Note that the maximum IRA contribution in 2022 is $6,000, plus an additional $1,000 for those 50 and older. That’s a total maximum, so you could park $3,000 in one IRA and $3,000 in another this year, but not $6,000 in each.

My dumbest investment

My dumbest investment was buying shares of Unity at its peak and losing more than half my money. That’s what I get for believing the hype. – W.F., online

The Fool responds: Positive opinions on a stock aren’t necessarily hype.

Those who study companies can be bullish (optimistic) about the prospects for a business, making perfectly reasonable arguments. At the same time, others might be bearish (pessimistic) about the same business.

Stock analysts are rarely, if ever, fully in agreement, and many times, companies won’t end up performing as expected.

Many stocks have been whacked by the recent market downturn, and video game software specialist Unity Software is among the hardest hit, with shares down some 80% from their highest point over the past year.

That’s partly due to the company revealing issues with its machine learning due to “bad data.”

It’s working to fix them, and is moving to acquire another company, ironSource, which has technology it can use.

This investment may turn out to be not-so-dumb, if some analysts are correct. They foresee Unity solving its problems, becoming more profitable due to ironSource and continuing to grow revenue at double-digit rates.

Others, though, dislike Unity’s plans to finance the acquisition by issuing more stock, diluting the value of existing shares – and to fix that problem by spending $2.5 billion to buy back shares. Do some research, and see what you think.