Vistra vs. NextEra Energy: Which Utility Stock Shines Brighter Now?

The companies operating under the Zacks Utility - Electric Power industry present a compelling case for stable, long-term income, supported by its regulated framework. This structure allows companies to recover costs and secure predictable returns, reducing earnings volatility. Steady electricity demand across economic cycles, combined with generally attractive dividend yields, makes the sector a reliable, defensive option for income-oriented investors. Given the capital-intensive nature of utility operations, the recent decline in interest rates by 25 basis points is especially advantageous, as it reduces financing expenses for long-term projects.The U.S. electric utilities sector is moving beyond its traditional role as a stable income generator, propelled by the accelerating shift toward clean energy. Significant investments in grid upgrades, renewable integration and electrification are being reinforced by federal incentives and climate-driven policies, reshaping the industry landscape. Utilities at the forefront of this transition are positioned to capture sustainable long-term growth, providing investors with a relatively lower-risk opportunity to participate in the expanding clean energy economy. NextEra Energy NEE and Vistra Energy VST are prominent U.S. electric utilities actively investing in renewable energy, making them pivotal players in the shift toward cleaner power generation.NextEra Energy stands out for its commitment to renewable energy and sustainable expansion. With substantial investments in wind, solar, battery storage, and grid modernization, the company is at the forefront of the clean energy transition. As the parent of Florida Power & Light and NextEra Energy Resources, it oversees one of the world’s largest wind and solar portfolios. Supported by strong financials and a history of innovation, NEE provides investors with an attractive balance of stability and long-term growth, in line with the global shift toward green energy.Vistra offers an attractive investment case, underpinned by its diversified generation mix and strong cash flow visibility. As one of the largest competitive power producers in the United States, it operates a well-balanced portfolio that includes natural gas, nuclear, solar and battery storage assets. Its nuclear operations provide a dependable, carbon-free baseload, ensuring stability through market fluctuations while supporting long-term decarbonization goals. Coupled with cost-efficient thermal assets and growing renewable and storage investments, this positions Vistra with both flexibility and a solid ESG profile. Supported by disciplined capital allocation and robust free cash flow, the company is well-equipped to drive sustainable growth and deliver consistent shareholder returns.Both companies are influential players in the utility space, and a direct comparison will help determine which stock offers stronger long-term value and better investment potential.VST & NEE’s Earnings Growth ProjectionsThe Zacks Consensus Estimate for Vistra’s earnings per share for 2025 and 2026 improved by 4.17% and 4.87%, respectively, over the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 10.16%.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for NextEra Energy’s earnings per share in 2025 and 2026 has remained the same over the past 60 days. Long-term earnings growth per share is pegged at 7.89%.Image Source: Zacks Investment ResearchReturn on Equity (ROE)Return on Equity (ROE) is an important measure of financial performance that indicates how efficiently a company converts shareholder equity into profits. It highlights management’s effectiveness in utilizing invested capital to grow earnings and enhance shareholder value.NEE’s current ROE is 12.31% compared with VST’s 108.41%. VST also outperforms the industry’s ROE of 10.35%.Image Source: Zacks Investment ResearchDebt to CapitalThe Zacks Utilities sector is a capital-intensive one, and huge investments are required at regular intervals to upgrade, maintain and expand operations. The usage of new evolving technology also requires investments. Therefore, utilities borrow from the market and add to their internal cash generation to fund their long-term investments.NextEra Energy’s debt-to-capital currently stands at 60.48% compared with Vistra’s debt-to-capital of 77.47%. Both companies are using debt to fund their business. NEE’s debt level is marginally lower than the industry’s debt-to-capital, which stands at 60.89%.ValuationNextEra Energy currently appears to be a tad cheaper compared with Vistra on a Price/Earnings Forward 12-month basis. (P/E- F12M).NEE is currently trading at 19.48X, while VST is trading at 26.02X compared with the industry’s 15.08X.NEE & VST’s Dividend YieldDividends are regular payments made by a company to its shareholders, representing a direct way for investors to earn a return on their investment. They are an important indicator of a company’s financial health and stability, often signaling strong cash flow and consistent earnings. Utilities are known for regular dividend payments to their shareholders.Currently, the dividend yield for NextEra Energy is 2.99%, while that for Vistra is 0.44%.Capital Expenditure PlansCapital expenditure is critical in the sector, as it drives infrastructure development, system reliability and long-term growth. Utilities must consistently invest in power generation, transmission, and distribution networks to meet rising demand, integrate renewable energy sources, and comply with evolving regulatory standards. NextEra Energy plans to invest nearly $74.6 billion in the 2025-2029 period to strengthen its infrastructure and add more clean electricity generation assets. Vistra aims to invest $2.27 billion in 2025, up from $1.85 billion and $1.61 billion invested in 2024 and 2023, respectively. The company’s capital expenditure is strategically directed toward the development of solar, battery storage and modernized gas-fired facilities.Both companies have capital investment plans, and the decline in interest rates will lower their capital servicing expenses, benefiting both companies.NEE & VST’s Dividend YieldDividends are regular payments made by a company to its shareholders and represent a direct way for investors to earn a return on their investment. They are an important indicator of a company’s financial health and stability, often signaling strong cash flow and consistent earnings. Utilities are known for regular dividend payments to their shareholders.Currently, the dividend yield for NextEra Energy is 2.99%, while that for Vistra is 0.44%.Price PerformanceNextEra Energy’s shares have gained 9.3% in the past three months compared with Vistra’s rally of 6.9%.Price Performance (Three months)Image Source: Zacks Investment ResearchWrapping UpNEE and VST are investing heavily in their infrastructure to serve millions of customers across the United States.NEE’s lower percentage of debt usage, cheaper valuation and better price performance make it a better choice in the utility space.Based on the above discussion, NextEra Energy currently has an edge over Vistra, despite the stocks presently carrying a Zacks Rank #3 (Hold) each.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NextEra Energy, Inc. (NEE): Free Stock Analysis Report Vistra Corp. (VST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks