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The utilities sector includes electric, gas, and water providers that operate in regulated markets.
As utility stocks offer predictable revenue, they are seen as defensive holdings in a diversified portfolio.
Top utility stocks to buy now include Otter Tail, MYR Group and ENGIE.
Utility stocks have long served as a cornerstone for conservative investors seeking income, relative stability, and downside protection. In periods of economic uncertainty, their regulated business models and consistent cash flows tend to stand out. Now, as interest rate expectations evolve and electricity demand accelerates from AI data centers, broader electrification, and renewable energy expansion, the sector is drawing renewed attention in 2026.
Below is a comprehensive guide to the best utility stocks, highlighting high performers, leading dividend payers, potentially undervalued opportunities, and companies with durable long term compounding potential.
Utility Stock Market Overview and Forecast
The utilities sector includes electric, gas, and water providers that operate in regulated markets. Because these companies generate predictable revenue streams, they are often seen as defensive holdings within a diversified portfolio.
In 2026, several forces are shaping the sector:
Rising electricity demand from data centers and AI infrastructure.
Grid modernization and renewable energy investments.
Interest-rate stabilization after prior tightening cycles.
Increased focus on ESG and decarbonization initiatives.
Utilities have historically outperformed during volatile or slowing markets, though they can lag in strong bull runs when investors favor higher growth sectors. Even so, improving earnings outlooks and capital investment plans are helping narrow that performance gap.
Is Now a Good Time to Invest in Utility Stocks?
Many analysts suggest utilities may benefit if interest rates stabilize or decline. Lower borrowing costs can improve margins because utilities rely heavily on debt financing for infrastructure projects. Meanwhile, steady dividend yields — often ranging between 3% and 6% — remain attractive compared to broader market averages.
Below, we examine and rank leading utility stocks using a blend of Zacks Rank signals, Style Scores, and core fundamental metrics to identify companies that may offer compelling long term opportunities for patient investors.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
Otter Tail blends a regulated Upper Midwest electric utility with smaller manufacturing lines, keeping the earnings core utility-driven. In Q1 2026, EPS rose nearly 7% year over year, and management reaffirmed full-year guidance, with the Electric segment improving while the Plastics dip was expected. Ongoing system investment and constructive rate mechanisms support rate base growth and help fund a 2.63% yield.
Potential Risks
Non-utility units can amplify downturns if demand softens, and weather costs can pressure results. The heavy capex cycle keeps the story sensitive to interest rates and regulatory lag.
Forecast
A Zacks Rank #1 (Strong Buy) signals positive estimate revisions, even as Style Scores of C for Value, D for Growth and F for Momentum suggest the market is less convinced. On the Price, Consensus & EPS Surprise chart, 2026-2027 EPS consensus is choppy and slightly lower in 2026, with a modest 2027 uptick.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
MYR Group is a specialty contractor for electric utilities, building transmission, distribution and substation projects tied to grid reliability and electrification. In Q1 2026, revenue reached $1 billion, earnings nearly doubled year over year, and backlog hit a record $2.84 billion, signaling solid demand and improved execution. That visibility can support growth even if project timing is lumpy.
Potential Risks
Contracting margins can swing on labor availability, weather delays, change orders and equipment lead times. Utilities can also pause or re-sequence work amid permitting friction, and the stock’s sharp run makes it vulnerable to any miss or guidance caution.
Forecast
A Zacks Rank #1 plus Growth A suggests revisions remain favorable, even with D for Value and Momentum. The 2026-2027 chart shows consensus EPS stepping higher in both years, with 2027 tracking above 2026, consistent with a pipeline that’s still translating into upward estimates.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
ENGIE is a global utility with exposure to regulated networks, renewables and energy services, which can smooth earnings through commodity cycles. In Q1 2026, it posted an operationally steady start, confirmed 2026 guidance, and highlighted network expansion, including completion of the UK Power Networks acquisition, while cash generation remained firm. Contracted renewables and grids underpin its 3.68% yield and provide ballast versus more volatile merchant power.
Potential Risks
Results can still be influenced by weather and price normalization versus last year’s higher base, and large-project execution or offshore-wind disputes can drive one-offs. Regulatory and political outcomes can also affect sentiment.
Forecast
A Zacks Rank #2 (Buy) with B for Value and Momentum but Growth D implies steadier, not explosive, upside. The 2026-2027 chart shows EPS consensus stair-stepping higher in both years, aligning with the rising share price and suggesting revisions support remains intact.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
VEON operates mobile and fixed networks across emerging markets, a communications “utility” in which recurring connectivity spending can be resilient. In the last reported quarter, revenue grew 17% year over year, EBITDA rose 18%, and equity free cash flow jumped, as digital services expanded their share of revenue. That mix shift matters because it can reduce reliance on pure subscriber economics and improve capital efficiency versus prior years.
Potential Risks
Geopolitical and regulatory exposure, especially in Ukraine and other higher-volatility markets, creates FX, spectrum and policy risk. Also, competitive pricing and elevated capex can squeeze returns.
Forecast
A Zacks Rank #2 with Value A, Growth D and Momentum C suggests the setup is revision-dependent. The 2026-2027 chart shows 2026 EPS estimates swinging before stabilizing, while 2027 steps higher, implying the market is betting the digital growth story remains durable.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
Sabesp is São Paulo’s dominant water and wastewater utility, with regulated, essential-service demand and long-lived infrastructure economics. In Q1 2026, adjusted net revenue rose about 11% year over year and EBITDA climbed roughly 26% as operating initiatives and tariff dynamics supported margins, while capex accelerated to expand networks and advance universal access goals. That mix can lift earnings durability over time, even with a modest dividend yield.
Potential Risks
Droughts can reduce volumes and raise costs, while political pressure can influence tariff decisions and allow returns. A faster investment ramp also raises execution and funding risk if inflation, rates or FX move against assumptions.
Forecast
A Zacks Rank #2 with Value B and Momentum A suggests improving fundamentals, despite a D for Growth. The 2026-2027 chart keeps 2026 EPS expectations relatively flat, then shows a sharp 2027 step-up, making regulatory outcomes and project delivery especially important.
The Zacks Rank is a proprietary stock-rating model that uses trends in earnings estimate revisions and earnings-per-share (EPS) surprises to classify stocks into five groups: #1 (Strong Buy), #2 (Buy), #3 (Hold), #4 (Sell) and #5 (Strong Sell). The Zacks Rank is calculated through four primary factors related to earnings estimates: analysts' consensus on earnings estimate revisions, the magnitude of revision change, the upside potential and estimate surprise (or the degree in which earnings per share deviated from the previous quarter).
Zacks builds the data from 3,000 analysts at over 150 different brokerage firms. The average yearly gain for Zacks Rank #1 (Strong Buy) stocks is +23.62% per year from January, 1988, through June 2, 2025.
Selections for Best Utility Stocks are based on the current top ranking stocks based on Zacks Indicator Score, Style Scores and fundamentals. All stocks have a daily trading volume of at least 100,000 shares and have a stock price of at least $5. All information is current as of market open, May 18, 2026.
Guide to Best Utility Stocks: What Are Utility Stocks?
Utility stocks represent companies that provide essential services like electricity, natural gas, and water to residential and commercial customers.
How Do Utility Stocks Work?
Most utilities operate as regulated monopolies within defined geographic areas. State regulators set allowable rates of return, creating predictable revenue streams in exchange for infrastructure investment.
Why Do People Invest in Utility Stocks?
Reliable dividend income.
Lower volatility relative to growth stocks.
Defensive performance during economic slowdowns.
How Often Do Utility Stocks Pay Dividends in a Year?
Most U.S. utility companies pay dividends quarterly (four times per year).
Pros of Utility Stocks
Stable cash flow.
Recession resilience.
Attractive dividend yields.
Essential-service demand.
Cons of Utility Stocks
Interest-rate sensitivity.
Heavy capital expenditure needs.
Regulatory risk.
Slower growth compared to tech sectors.
Utility ETFs vs Utility Stocks
Investors can choose individual stocks or diversified ETFs.
Best Utility ETFs
Utilities Select Sector SPDR Fund (XLU)
Vanguard Utilities ETF (VPU)
iShares U.S. Utilities ETF (IDU)
ETFs offer instant diversification, while individual stocks may provide higher upside potential.
How to Choose the Best Utility Stocks
Consider:
Dividend yield and payout ratio.
Earnings and revenue consistency.
Regulatory environment strength.
Debt levels and credit ratings.
Renewable transition strategy.
Long-term infrastructure growth plans.
What Are the Utility Stocks That Are Good Investments?
Electric: Duke Energy (DUK), NextEra Energy (NEE). Water: American Water Works (AWK). Gas: Atmos Energy (ATO). ESG-friendly: Xcel Energy (XEL), NextEra Energy (NEE).
How to Buy Utility Stocks
Open a brokerage account.
Research financials and dividend history.
Decide between individual stocks or ETFs.
Monitor regulatory developments and earnings reports.
Tips for Building a Utility Portfolio
Blend high-yield and growth utilities.
Diversify across electric, gas, and water.
Include at least one ETF for balance.
Reinvest dividends for compounding.
Frequently Asked Questions About Utility Stocks
How Are Utility Dividends Taxed?
Most are qualified dividends taxed at long-term capital gains rates, though investors should verify individual tax situations.
Are Utility Stocks Safe During Recessions?
Historically, utilities have outperformed the broader market during downturns because demand for electricity and water remains steady.
What’s a Good Dividend Yield for Utility Stocks?
According to industry rankings from research firms like Zacks, many electric utilities historically yield between 3% and 5%, higher than the broader S&P 500 average.
Are Utility Stocks Safe for Beginners?
Yes, they are often considered beginner-friendly due to predictable earnings and dividends.
Are Utility Stocks Good for Passive Income?
They are widely used in income-focused portfolios because of consistent quarterly payouts.
How Do Utility Stocks Perform During Market Downturns?
They typically decline less than high-growth sectors but may still experience volatility during severe selloffs.
Is Now a Good Time to Invest in Utility Stocks?
With rising electricity demand and potential interest-rate stabilization, 2025 presents favorable conditions for selective utility investments.
How Do Rising Interest Rates Affect Utility Stocks?
Higher rates can pressure valuations because utilities rely heavily on debt and compete with bond yields for income-focused investors.
Bottom Line
The best utility stocks in March 2025 combine reliable dividends, manageable debt, constructive regulatory environments, and exposure to long-term electrification trends. Whether you prioritize income, growth, or retirement stability, utilities remain a foundational sector for diversified portfolios.
View the Zacks #1 Rank List
Strong Buy 
Buy 
