There is no such thing as a perfect stock investment. You always have to make trade-offs, balancing positive factors against negative ones. This is something that’s important to consider when you look at giant U.S. utility NextEra Energy (NEE 1.25%).

But don’t think about this stock in a vacuum. Comparing it to another option, like Dominion Energy (D 0.81%), will help show what you are getting and what you are giving up.

What does NextEra Energy do?

NextEra Energy is an interesting utility because its business spans beyond the regulated utility sector and into renewable power. Its regulated utility operation in Florida — Florida Power & Light — is the foundation of the company, for sure. And it is a very strong foundation, given the population growth that the state has seen for decades. This is a reliable and growing business in and of itself.

However, on top of this large electric utility, NextEra Energy has built one of the world’s largest clean energy businesses. The operation spans solar, wind, and, increasingly, battery storage. This is the company’s growth engine, noting that it has a backlog of around 22.6 gigawatts today. That said, it hopes to be able to build as much as 46.5 gigawatts of clean power production between 2024 and 2027. It currently has 34 gigawatts of capacity, so the goal is to effectively double the size of this business in a very short period of time.

All of this investment has resulted in impressive growth, which has shown up most notably in the 10% annualized dividend growth rate over the past decade. That pace of dividend growth is set to continue through at least 2026, backed by earnings growth of 6% to 8% a year through 2027. That’s an impressive dividend growth rate for any company, let alone a utility (half that rate would be good for a utility).

What does Dominion Energy do?

Dominion Energy is a large regulated utility as well. However, it has been trimming down its business, casting off operations in energy production, pipelines, and even selling regulated natural gas utilities. At this point, it has homed in on being a pure-play regulated electric utility. It isn’t nearly as exciting as NextEra Energy in this regard, but don’t underestimate the company’s potential.

Dominion has a large offshore wind project under development and a monopoly (as a regulated utility) in one of the world’s largest data center hotspots. The company is investing heavily for the future, which it believes will allow earnings to grow between 5% and 7% a year between 2025 and 2029. That’s close to what is on offer from NextEra Energy but it is backed by just regulated assets, projects that generally come with lower risk than the market-based types of clean energy projects NextEra Energy is leaning on for growth.

Which one is the better choice: NextEra Energy or Dominion?

Here’s where things get interesting. NextEra Energy is a highly popular utility stock that is usually afforded a premium price. The dividend yield is just 2.6% or so, which is below the utility industry average of around 3%, using the Utilities Select Sector SPDR ETF (XLU 0.75%) as an industry proxy. Dominion Energy’s dividend yield is a far more compelling 4.7%.

D Dividend Per Share (Quarterly) data by YCharts

Don’t rush out and buy Dominion just yet. The company cut the dividend a few years back as it revamped its portfolio. And, today, while it is overhauling the portfolio again, it is focused on balance sheet strength and lowering its dividend payout ratio. So that high yield isn’t going to come along with dividend growth for a little bit, perhaps a few years. NextEra Energy’s dividend, as noted, has grown at a rapid clip for over a decade. A growing income stream is hard to complain about and, in fact, some investors focus more on dividend growth than yield.

In other words, deciding between high-yield Dominion and dividend grower NextEra Energy isn’t a simple call. The end goal for Dominion is to get back to dividend growth, which will likely track along with earnings growth over time. So there’s a light at the end of the tunnel, but to get there you’ll need to be comfortable with zero dividend growth for a bit. And even after the dividend starts rising again, the rate of dividend growth will be lower than what you would get from NextEra Energy if it keeps the current pace up, as expected.

What are you looking to achieve?

If your goal is to maximize current income, perhaps to supplement Social Security in retirement, then Dominion might be a good option. You’ll get a higher yield and there is meaningful potential for dividend growth to resume at some point in the future. If you are a dividend growth investor, however, it is likely you’ll want to own NextEra Energy. Just go in knowing that you are paying a premium for the dividend growth, which means collecting a lower starting yield. But, hopefully, the rapid dividend growth will make up for that over time. And given a long enough investment time frame (think in decades here), that could even make it the better income choice, too.