Quick Read
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Southern Company beats NextEra Energy for retirees, paying a 3% yield, swinging less than the market, and avoiding merger risk, while NextEra grows faster.
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NextEra's Dominion Energy deal needs Virginia, South Carolina and North Carolina regulators to approve it before an expected 2027 close, adding deal risk.
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NextEra targets 8% annual earnings growth through 2032, but $3 billion of hedge profits flattered its GAAP income and make its P/E look cheaper.
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If you're retiring soon and want a utility, should you own NextEra Energy( NYSE:NEE ) or Southern Company( NYSE:SO ) right now? Both just beat third-quarter expectations, and both are selling power to the data centers moving into the Southeast. NextEra is growing faster. Southern pays a bigger check today, and for retirees the check matters more.
Both companies make most of their money the same way. State regulators let them charge rates that cover their costs plus a return on the power plants, poles and wires they build. Southern owns Alabama Power, Georgia Power, Mississippi Power, Southern Company Gas, and Southern Power, which sells electricity wholesale. NextEra pairs Florida Power & Light (FPL) with NextEra Energy Resources, which builds wind, solar and battery projects and sells their output under long-term contracts.
Growth Trajectory: NextEra Is Pulling Away
NextEra posted adjusted EPS of $1.24 versus a $1.18 estimate, its 6th straight consensus beat, with adjusted EPS up 9.7% YoY. Management expects adjusted EPS to grow 8%+ a year through 2032 from a 2025 base of $3.71. It says that rises to 9%+ if the deal with Dominion Energy( NYSE:D ) closes. Its pipeline of planned renewable and battery projects (the backlog) reached ~36.7 GW.
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Southern also had a strong quarter: adjusted EPS of $1.94 versus $1.71 expected and commercial sales up 10.1% on data center demand. However, it gave no explicit forward EPS guidance. Winner: NextEra.
Yield and Income: Southern Pays You More Today
Southern yields 3.15% on a $2.94 annual dividend. NextEra yields 2.76% on $2.436. NextEra raised its 2026 quarterly payout from $0.5665 to $0.6232, about 10%. Southern went from $0.74 to $0.76, about 2.7%. NextEra's raises slow to 6% per year from year-end 2026 through 2028, though.
NextEra also has more room between earnings and dividends. Its payout equals about 61% of the top of its 2026 guidance. Southern pays out about 68% of its FY25 adjusted EPS of $4.30. Still, Southern's dividend has risen every year since 2002, and retirees live on the yield they collect today. Winner: Southern.
Earnings Quality and Risk: Southern Lets You Sleep
NextEra's GAAP net income of $4.78B included $3.00B of after-tax profits on hedges. That makes its trailing P/E of 16 look cheaper than it is. On next year's earnings, NextEra is valued at 21 times, compared with 19 for Southern. NextEra's revenue of $8.09B also missed the $8.88B estimate. The Dominion deal still needs regulators in Virginia, South Carolina, and North Carolina to sign off before an expected close in 2H 2027. NextEra also expects to issue $12 billion-$17 billion of new stock through 2032.
Southern's beta, a measure of how much a stock swings with the market, is 0.286 versus NextEra's 0.6. Over five years, Southern shares rose 75.52% while NextEra rose 16.25%. Debt is similar: about 1.80 times equity at Southern and 1.85 at NextEra.
Southern has risks too. Illinois regulators have turned down some Nicor Gas investments, and interest costs are rising. Its share count also grew from 1.109 billion to 1.160 billion this year, which spreads earnings across more shares. Winner: Southern.
Verdict: Southern Wins the Retirement Portfolio
Southern's profile lines up more closely with the needs of investors living off portfolio income. It pays a higher yield, swings less, and has a longer record of steady raises, with no pending merger. NextEra fits a different investor: someone 10 or more years from retirement who wants faster dividend growth and can live with deal risk and lower income today.
Next, watch whether NextEra announces the large data center power deal it expects by year-end. For Southern, watch whether it gives 2027 guidance with its fourth-quarter earnings report.
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