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4 Utility Stocks to Buy From the Flourishing Electric Power Industry
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The Zacks Utility-Electric Power industry players generate and deliver electricity to millions of customers across the United States. Utilities are steadily transitioning toward cleaner fuel sources and placing greater emphasis on lowering carbon emissions, aided by government initiatives that support the shift to cleaner power generation. Alongside sustainability efforts, utilities are investing in grid modernization and strengthening transmission and distribution infrastructure. With hurricanes posing recurring annual risks, year-round infrastructure upgrades enhance system resilience, reduce outages and enable quicker power restoration for customers affected by storms.
NextEra Energy (NEE - Free Report) , with its expanding clean power generation portfolio and customer base, renewable operations and well-chalked-out capital investments to strengthen infrastructure, offers an excellent opportunity to stay invested in the utility space. Other utilities worth adding to your portfolio are Ameren Corporation (AEE - Free Report) , Alliant Energy Corporation (LNT - Free Report) and Pinnacle West Capital Corporation (PNW - Free Report) .
About the Industry
The Utility-Electric Power industry oversees the generation, transmission, distribution, storage and retailing of electricity to consumers. Demand for utility services is generally stable across economic cycles, aside from fluctuations driven by unusual weather conditions, as periods of extreme heat or cold typically increase electricity usage. The sector is undergoing a significant transition, with an expanding number of companies committing to zero-emission goals. At the same time, rapid growth in global internet use, increasing usage of electric vehicles, reshoring of some industries and the expected expansion of artificial intelligence are set to meaningfully lift power demand, since AI workloads consume far more electricity than traditional online activities such as streaming music or browsing photos. Lower interest rates also bode well for this capital-intensive industry.
3 Trends Shaping the Future of the Electric Power Industry
Interest Rate Relief Enhances Growth Potential: Utilities to continue with maintenance, upgrades and expansion efforts, often turn to capital markets for financing as internally generated funds are not always sufficient to cover planned expenses. After increasing the benchmark interest rate to the 5.25-5.50% range, the Fed has shifted its stance, cutting rates multiple times and bringing the benchmark down to 3.75-4.00%. The rate decline is particularly advantageous for companies planning substantial infrastructure investments. Additional rate cuts are anticipated in 2026 and expected to further benefit utility operators.
Utilities Accelerate Shift to Clean Energy: U.S. electric power operators are steadily transitioning toward cleaner energy sources. According to the U.S. Energy Information Administration (“EIA”), the share of U.S. electricity generation from renewables is projected to increase from 23% in 2025 to 25% in 2026 and reach 28% in 2027, driven by continued growth in solar and wind capacity. The Inflation Reduction Act is expected to further accelerate this shift by eliminating uncertainties around federal renewable energy incentives. By providing long-term, predictable support for a broad range of low-cost clean energy solutions, the act enhances earnings visibility and strengthens the utilities’ pathway toward decarbonization. The development of large battery storage projects in the United States is supporting the renewable projects as it removes the intermittency of renewable energy.
Increasing Consumption and Prices for Electricity: Per the EIA, consumption of electricity is expected to increase in the United States. The consumption is expected to increase 1% in 2026 from 2025 levels and further increase 3% in 2027. Per EIA, the price of average electricity to be provided to customers in the industrial, commercial and residential sectors will increase 1.9%, 2.3% and 3.8%, respectively, in 2026. The same trend is expected to continue in 2027 as well, boosting revenues of the companies operating in this space. Demand for electricity is rising in the United States due to a surge in domestic manufacturing, higher usage of electric vehicles, the development of data centers and AI, and an increase in residential usage.
Zacks Industry Rank Indicates Positive Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The 56-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #87, which places it in the top 36% of more than 244 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks Rank industries is a result of a positive earnings outlook for the constituent companies in aggregate. The industry’s recent earnings estimate reflects optimism from the analysts.
Before we present a few Utility-Electric Power stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and current valuation.
Electric Power Industry Beats the S&P 500 and the Sector
The Utility Electric Power industry has surpassed the Zacks S&P 500 and its own sector over the past 12 months. The industry has gained 24.2% compared with its sector’s 21% rally. The Zacks S&P 500 composite has gained 16.5% in the same period.
Price Performance (One year)
Electric Power Industry's Current Valuation
On the basis of EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) TTM, which is a commonly used multiple for valuing Utility Electric Power companies, the industry is trading at 13.24X compared with the S&P 500’s 18.9X and the Utility sector’s 12.48X.
Over the past five years, the industry has traded as high as 21.31X, as low as 12.27X and at the median of 15.21X.
Industry EV/EBITDA TTM vs S&P 500 (5yrs)
Industry EV/EBITDA TTM vs Sector (5yrs)
4 Electric Power Industry Stocks to Buy
Utilities is a mature sector and all the stocks selected from the Zacks Utility-Electric Power industry have a market capitalization of nearly $11 billion. The stocks currently have a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
NextEra Energy: Juno Beach, FL-based NextEra Energy is engaged in the generation, transmission, distribution and sale of electric energy. The company has a well-chalked-out capital deployment plan, which will be directed toward modernizing and strengthening the existing infrastructure and generating more electricity from clean sources to lower carbon emissions. The company has plans to invest more than $74 billion through the 2029 period to strengthen its operations further.
NEE’s long-term (three to five years) earnings growth is pegged at 8.08%. The current dividend yield for NEE is 2.67%, which is better than the Zacks S&P 500 composite’s yield of 1.35%. The Zacks Consensus Estimate for NextEra Energy’s 2026 earnings per share indicates growth of 0.5% in the past 60 days.
Price and Consensus: NEE
Ameren Corporation: St. Louis, MO-based Ameren, a utility that generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. It expects capital deployment in excess of $26.3 billion in different projects from 2025 to 2029. Ameren’s growth has been led by its systematic and consistent investments in growth projects and infrastructural upgrades.
AEE’s long-term earnings growth is pegged at 8.52%. The current dividend yield for AEE is 2.78%. The Zacks Consensus Estimate for AEE’s 2026 earnings per share implies growth of 0.5% in the past 60 days.
Price and Consensus: AEE
Alliant Energy Corporation: Madison, WI-based Alliant Energy, along with its subsidiaries engaged in regulated electric and natural gas services. The company benefits from strong demand from its expanding customer base. Alliant Energy expects long-term capital expenditure of $13.4 billion during the 2026-2029 period.
LNT’s long-term earnings growth is pegged at 7.15%. The current dividend yield for LNT is 3.04%. The Zacks Consensus Estimate for LNT’s 2026 earnings per share indicates year-over-year growth of 6.92%.
Price and Consensus: LNT
Pinnacle West Capital Corporation: Phoenix, AZ-based Pinnacle West Capital is involved in the generation, transmission and distribution of electricity from coal, nuclear, gas, oil and solar. The company has a capital investment plan of $8 billion for the 2026-2028 period. Pinnacle West’s Metro Phoenix service region continues to witness solid growth in commercial activities. Improved economic conditions in Arizona have resulted in an expanding customer base and rising demand for its services.
PNW’s long-term earnings growth is pegged at 3.56%. The current dividend yield for PNW is 3.95%. The Zacks Consensus Estimate for PNW’s 2026 earnings per share implies growth of 0.86% in the past 60 days.
Price and Consensus: PNW
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4 Utility Stocks to Buy From the Flourishing Electric Power Industry
The Zacks Utility-Electric Power industry players generate and deliver electricity to millions of customers across the United States. Utilities are steadily transitioning toward cleaner fuel sources and placing greater emphasis on lowering carbon emissions, aided by government initiatives that support the shift to cleaner power generation. Alongside sustainability efforts, utilities are investing in grid modernization and strengthening transmission and distribution infrastructure. With hurricanes posing recurring annual risks, year-round infrastructure upgrades enhance system resilience, reduce outages and enable quicker power restoration for customers affected by storms.
NextEra Energy (NEE - Free Report) , with its expanding clean power generation portfolio and customer base, renewable operations and well-chalked-out capital investments to strengthen infrastructure, offers an excellent opportunity to stay invested in the utility space. Other utilities worth adding to your portfolio are Ameren Corporation (AEE - Free Report) , Alliant Energy Corporation (LNT - Free Report) and Pinnacle West Capital Corporation (PNW - Free Report) .
About the Industry
The Utility-Electric Power industry oversees the generation, transmission, distribution, storage and retailing of electricity to consumers. Demand for utility services is generally stable across economic cycles, aside from fluctuations driven by unusual weather conditions, as periods of extreme heat or cold typically increase electricity usage. The sector is undergoing a significant transition, with an expanding number of companies committing to zero-emission goals. At the same time, rapid growth in global internet use, increasing usage of electric vehicles, reshoring of some industries and the expected expansion of artificial intelligence are set to meaningfully lift power demand, since AI workloads consume far more electricity than traditional online activities such as streaming music or browsing photos. Lower interest rates also bode well for this capital-intensive industry.
3 Trends Shaping the Future of the Electric Power Industry
Interest Rate Relief Enhances Growth Potential: Utilities to continue with maintenance, upgrades and expansion efforts, often turn to capital markets for financing as internally generated funds are not always sufficient to cover planned expenses. After increasing the benchmark interest rate to the 5.25-5.50% range, the Fed has shifted its stance, cutting rates multiple times and bringing the benchmark down to 3.75-4.00%. The rate decline is particularly advantageous for companies planning substantial infrastructure investments. Additional rate cuts are anticipated in 2026 and expected to further benefit utility operators.
Utilities Accelerate Shift to Clean Energy: U.S. electric power operators are steadily transitioning toward cleaner energy sources. According to the U.S. Energy Information Administration (“EIA”), the share of U.S. electricity generation from renewables is projected to increase from 23% in 2025 to 25% in 2026 and reach 28% in 2027, driven by continued growth in solar and wind capacity. The Inflation Reduction Act is expected to further accelerate this shift by eliminating uncertainties around federal renewable energy incentives. By providing long-term, predictable support for a broad range of low-cost clean energy solutions, the act enhances earnings visibility and strengthens the utilities’ pathway toward decarbonization. The development of large battery storage projects in the United States is supporting the renewable projects as it removes the intermittency of renewable energy.
Increasing Consumption and Prices for Electricity: Per the EIA, consumption of electricity is expected to increase in the United States. The consumption is expected to increase 1% in 2026 from 2025 levels and further increase 3% in 2027. Per EIA, the price of average electricity to be provided to customers in the industrial, commercial and residential sectors will increase 1.9%, 2.3% and 3.8%, respectively, in 2026. The same trend is expected to continue in 2027 as well, boosting revenues of the companies operating in this space. Demand for electricity is rising in the United States due to a surge in domestic manufacturing, higher usage of electric vehicles, the development of data centers and AI, and an increase in residential usage.
Zacks Industry Rank Indicates Positive Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The 56-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #87, which places it in the top 36% of more than 244 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks Rank industries is a result of a positive earnings outlook for the constituent companies in aggregate. The industry’s recent earnings estimate reflects optimism from the analysts.
Before we present a few Utility-Electric Power stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and current valuation.
Electric Power Industry Beats the S&P 500 and the Sector
The Utility Electric Power industry has surpassed the Zacks S&P 500 and its own sector over the past 12 months. The industry has gained 24.2% compared with its sector’s 21% rally. The Zacks S&P 500 composite has gained 16.5% in the same period.
Price Performance (One year)
Electric Power Industry's Current Valuation
On the basis of EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) TTM, which is a commonly used multiple for valuing Utility Electric Power companies, the industry is trading at 13.24X compared with the S&P 500’s 18.9X and the Utility sector’s 12.48X.
Over the past five years, the industry has traded as high as 21.31X, as low as 12.27X and at the median of 15.21X.
Industry EV/EBITDA TTM vs S&P 500 (5yrs)
Industry EV/EBITDA TTM vs Sector (5yrs)
4 Electric Power Industry Stocks to Buy
Utilities is a mature sector and all the stocks selected from the Zacks Utility-Electric Power industry have a market capitalization of nearly $11 billion. The stocks currently have a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
NextEra Energy: Juno Beach, FL-based NextEra Energy is engaged in the generation, transmission, distribution and sale of electric energy. The company has a well-chalked-out capital deployment plan, which will be directed toward modernizing and strengthening the existing infrastructure and generating more electricity from clean sources to lower carbon emissions. The company has plans to invest more than $74 billion through the 2029 period to strengthen its operations further.
NEE’s long-term (three to five years) earnings growth is pegged at 8.08%. The current dividend yield for NEE is 2.67%, which is better than the Zacks S&P 500 composite’s yield of 1.35%. The Zacks Consensus Estimate for NextEra Energy’s 2026 earnings per share indicates growth of 0.5% in the past 60 days.
Price and Consensus: NEE
Ameren Corporation: St. Louis, MO-based Ameren, a utility that generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. It expects capital deployment in excess of $26.3 billion in different projects from 2025 to 2029. Ameren’s growth has been led by its systematic and consistent investments in growth projects and infrastructural upgrades.
AEE’s long-term earnings growth is pegged at 8.52%. The current dividend yield for AEE is 2.78%. The Zacks Consensus Estimate for AEE’s 2026 earnings per share implies growth of 0.5% in the past 60 days.
Price and Consensus: AEE
Alliant Energy Corporation: Madison, WI-based Alliant Energy, along with its subsidiaries engaged in regulated electric and natural gas services. The company benefits from strong demand from its expanding customer base. Alliant Energy expects long-term capital expenditure of $13.4 billion during the 2026-2029 period.
LNT’s long-term earnings growth is pegged at 7.15%. The current dividend yield for LNT is 3.04%. The Zacks Consensus Estimate for LNT’s 2026 earnings per share indicates year-over-year growth of 6.92%.
Price and Consensus: LNT
Pinnacle West Capital Corporation: Phoenix, AZ-based Pinnacle West Capital is involved in the generation, transmission and distribution of electricity from coal, nuclear, gas, oil and solar. The company has a capital investment plan of $8 billion for the 2026-2028 period. Pinnacle West’s Metro Phoenix service region continues to witness solid growth in commercial activities. Improved economic conditions in Arizona have resulted in an expanding customer base and rising demand for its services.
PNW’s long-term earnings growth is pegged at 3.56%. The current dividend yield for PNW is 3.95%. The Zacks Consensus Estimate for PNW’s 2026 earnings per share implies growth of 0.86% in the past 60 days.
Price and Consensus: PNW