Best Utility Stocks to Buy for May 2026

Best Utility Stocks to Buy for May 2026

Kevin Voigt

PAMVIVLUMNENGIYOTTR

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Key Takeaways

  • 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 Pampa Energía, Telefônica Brasil, and Lumen Technologies.

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.

Company (Ticker)12 Week Price ChangeForward PEPriceProj EPS Growth (1 Year)Projected Sales Growth (1Y)Report
Pampa Energia (PAM)-4.69%9.02$80.4126.74%24.91%
Telefonica Brasil (VIV)5.70%17.42$15.7633.09%12.80%
Lumen Technologies (LUMN)15.63%NA$9.3328.21%-12.25%Free Research Report: LUMN
ENGIE - Sponsored ADR (ENGIY)13.90%15.14$32.5133.92%-0.53%
Otter Tail (OTTR)4.17%16.57$90.59-16.34%2.17%

*Updated on May 4, 2026.

Pampa Energia (PAM)

$80.41 USD +1.16 (1.46%)

3-Year Stock Price Performance

3 Year Stock Price Performance Chart for PAM

Premium Research for PAM

Zacks Rank

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.

Zacks Rank Definition Annualized Return
1Strong Buy23.93%
2Buy18.12%
3Hold10.10%
4Sell5.65%
5Strong Sell2.94%
S&P50011.36%

Zacks Rank Education - Learn about the Zacks Rank

Zacks Rank Home - Zacks Rank resources in one place

Zacks Premium - The only way to fully access the Zacks Rank

Trending upward Strong Buy 1
Zacks Industry Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank

Bottom 43% (138 out of 244)
Zacks Sector Rank

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.

Zacks Sector Rank Education - Learn more about the Zacks Sector Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank

Top 25% (4 out of 16)
Style Scores

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 Score A
  • Growth Score A
  • Momentum Score A
  • VGM Score A

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 Style Scores Education - Learn more about the Zacks Style Scores

B Value B Growth B Momentum A VGM

Earnings ESP

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.

Visit the Earnings ESP Center

See the Full List of Stocks To Beat Earnings

0.00%
  • Market Cap:$4.31 B (Mid Cap)
  • Projected EPS Growth:26.70%
  • Last Quarter EPS Growth:614.29%
  • Last EPS Surprise:361.54%
  • Next EPS Report date:May 11, 2026

Our Take:

Reasons to Buy

Pampa Energía is an Argentine power-and-gas operator with real utility exposure through electricity generation and transmission. The company is gaining from growth in shale oil volumes at the Rincón de Aranda site and strong performance across its thermal power plants. Pampa’s scale and operating footprint position it to benefit from Argentina’s gradual energy-market normalization as the country works to stabilize pricing and expand reliable generation capacity.

Potential Risks

Argentina’s inflation, currency volatility, capital controls, and shifting energy policy can quickly reshape cash generation and valuation. Results also move with gas and power prices and plant availability, while sovereign risk can keep financing costs elevated.

Forecast

A Zacks Rank #1 (Strong Buy) with Scores of B for Value, Growth, and Momentum indicates favorable revision momentum. The Price, Consensus & EPS Surprise chart shows a strong but choppy price run, while the 2026 EPS consensus has recently stepped lower, and surprises have turned mixed after earlier beats.

Free Research Report: PAM

Telefonica Brasil (VIV)

$15.76 USD -0.01 (-0.06%)

3-Year Stock Price Performance

3 Year Stock Price Performance Chart for VIV

Premium Research for VIV

Zacks Rank

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.

Zacks Rank Definition Annualized Return
1Strong Buy23.93%
2Buy18.12%
3Hold10.10%
4Sell5.65%
5Strong Sell2.94%
S&P50011.36%

Zacks Rank Education - Learn about the Zacks Rank

Zacks Rank Home - Zacks Rank resources in one place

Zacks Premium - The only way to fully access the Zacks Rank

Strong Buy 1
Zacks Industry Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank

Top 24% (59 out of 244)
Zacks Sector Rank

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.

Zacks Sector Rank Education - Learn more about the Zacks Sector Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank

Top 25% (4 out of 16)
Style Scores

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 Score A
  • Growth Score A
  • Momentum Score A
  • VGM Score A

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 Style Scores Education - Learn more about the Zacks Style Scores

C Value C Growth C Momentum B VGM

Earnings ESP

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.

Visit the Earnings ESP Center

See the Full List of Stocks To Beat Earnings

32.70%
  • Market Cap:$25.65 B (Large Cap)
  • Projected EPS Growth:33.82%
  • Last Quarter EPS Growth:0.00%
  • Last EPS Surprise:29.41%
  • Next EPS Report date:May 11, 2026

Our Take:

Reasons to Buy

Telefônica Brasil runs Brazil’s leading mobile and fixed connectivity network, a “utility-like” franchise in essential communications. The company’s strong operating scale in network coverage, customer service, and distribution tends to support steady service revenue, disciplined pricing, and lower churn over time. Its healthy dividend yield is also a key part of the appeal, offering steady income to investors.

Potential Risks

Brazilian competition can pressure pricing, and heavy spectrum, network, and fiber capex can squeeze free cash flow if growth slows. Regulatory changes around spectrum fees, taxes, or consumer rules could raise costs.

Forecast

A Zacks Rank #1 paired with Scores of C for Value, Growth, and Momentum suggests estimate revisions are favorable, even if style signals are neutral. The company’s chart shows the stock breaking higher into 2026, as the 2026–2027 EPS consensus improves lately, while earnings surprises are mixed.

Free Research Report: VIV

Lumen Technologies (LUMN)

$9.33 USD +0.01 (0.11%)

3-Year Stock Price Performance

3 Year Stock Price Performance Chart for LUMN

Premium Research for LUMN

Zacks Rank

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.

Zacks Rank Definition Annualized Return
1Strong Buy23.93%
2Buy18.12%
3Hold10.10%
4Sell5.65%
5Strong Sell2.94%
S&P50011.36%

Zacks Rank Education - Learn about the Zacks Rank

Zacks Rank Home - Zacks Rank resources in one place

Zacks Premium - The only way to fully access the Zacks Rank

Trending upward Strong Buy 1
Zacks Industry Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank

Top 24% (59 out of 244)
Zacks Sector Rank

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.

Zacks Sector Rank Education - Learn more about the Zacks Sector Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank

Top 25% (4 out of 16)
Style Scores

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 Score A
  • Growth Score A
  • Momentum Score A
  • VGM Score A

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 Style Scores Education - Learn more about the Zacks Style Scores

C Value B Growth F Momentum C VGM

Earnings ESP

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.

Visit the Earnings ESP Center

See the Full List of Stocks To Beat Earnings

27.27%
  • Market Cap:$9.60 B (Mid Cap)
  • Projected EPS Growth:30.77%
  • Last Quarter EPS Growth:215.00%
  • Last EPS Surprise:209.52%
  • Next EPS Report date:May 5, 2026

Our Take:

Reasons to Buy

Lumen Technologies operates long-haul and metro fiber networks, a communications-utility backbone increasingly geared to enterprise connectivity. Solid investments in Private Connectivity Fabric (“PCF”) solutions are expected to create future revenue streams and strengthen Lumen’s position as a relevant infrastructure player going forward. Higher adoption of the company’s network-as-a-service (NaaS) solutions and connected ecosystem are other key tailwinds.

Potential Risks

Legacy revenue declines can outpace new bookings, and execution missteps could pressure margins and cash flow. Even after deleveraging, the stock remains sensitive to guidance, refinancing needs, and capex tradeoffs.

Forecast

A Zacks Rank #1 is constructive, but Scores of C for Value, B for Growth, and F for Momentum imply mixed signals. The company’s chart shows forward EPS estimates lifting into 2026–2027 after recent beats, while the stock has already bounced.

Free Research Report: LUMN

ENGIE - Sponsored ADR (ENGIY)

$32.51 USD -2.16 (-6.23%)

3-Year Stock Price Performance

3 Year Stock Price Performance Chart for ENGIY

Premium Research for ENGIY

Zacks Rank

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.

Zacks Rank Definition Annualized Return
1Strong Buy23.93%
2Buy18.12%
3Hold10.10%
4Sell5.65%
5Strong Sell2.94%
S&P50011.36%

Zacks Rank Education - Learn about the Zacks Rank

Zacks Rank Home - Zacks Rank resources in one place

Zacks Premium - The only way to fully access the Zacks Rank

Trending upward Buy 2
Zacks Industry Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank

Bottom 43% (138 out of 244)
Zacks Sector Rank

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.

Zacks Sector Rank Education - Learn more about the Zacks Sector Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank

Top 25% (4 out of 16)
Style Scores

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 Score A
  • Growth Score A
  • Momentum Score A
  • VGM Score A

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 Style Scores Education - Learn more about the Zacks Style Scores

B Value D Growth F Momentum D VGM

Earnings ESP

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.

Visit the Earnings ESP Center

See the Full List of Stocks To Beat Earnings

NA
  • Market Cap:$88.15 B (Large Cap)
  • Projected EPS Growth:33.92%
  • Last Quarter EPS Growth:NA
  • Last EPS Surprise:NA
  • Next EPS Report date:May 28, 2026

Our Take:

Reasons to Buy

ENGIE is a global utility spanning regulated networks, renewable generation, and energy management. The company’s core appeal is its shift toward more contracted, lower-volatility earnings as it expands renewables, batteries, and long-term power purchase agreements, which can stabilize cash flows and support dividends through cycles. The stock’s dividend yield adds a tangible component to total return.

Potential Risks

Large M&A raises integration and funding risk, and regulated returns can be reset by policymakers. ENGIE also retains exposure to commodity-driven volatility and to execution around its Belgian nuclear arrangements.

Forecast

A Zacks Rank #2 (Buy) is supportive, with Scores of B for Value, D for Growth, and F for Momentum, indicating revisions are positive, though style signals are uneven. The company’s chart shows a 2026 price breakout alongside higher 2026–2027 EPS lines, so guidance follow-through is the key catalyst.

Free Research Report: ENGIY

Otter Tail (OTTR)

$90.59 USD -0.19 (-0.21%)

3-Year Stock Price Performance

3 Year Stock Price Performance Chart for OTTR

Premium Research for OTTR

Zacks Rank

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.

Zacks Rank Definition Annualized Return
1Strong Buy23.93%
2Buy18.12%
3Hold10.10%
4Sell5.65%
5Strong Sell2.94%
S&P50011.36%

Zacks Rank Education - Learn about the Zacks Rank

Zacks Rank Home - Zacks Rank resources in one place

Zacks Premium - The only way to fully access the Zacks Rank

Trending downward Buy 2
Zacks Industry Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank

Bottom 43% (138 out of 244)
Zacks Sector Rank

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.

Zacks Sector Rank Education - Learn more about the Zacks Sector Rank

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%.

Zacks Rank Education -- Learn more about the Zacks Rank
Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank

Top 25% (4 out of 16)
Style Scores

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 Score A
  • Growth Score A
  • Momentum Score A
  • VGM Score A

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 Style Scores Education - Learn more about the Zacks Style Scores

B Value D Growth F Momentum D VGM

Earnings ESP

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.

Visit the Earnings ESP Center

See the Full List of Stocks To Beat Earnings

0.00%
  • Market Cap:$3.81 B (Mid Cap)
  • Projected EPS Growth:-16.34%
  • Last Quarter EPS Growth:-33.87%
  • Last EPS Surprise:6.03%
  • Next EPS Report date:May 4, 2026

Our Take:

Reasons to Buy

Otter Tail is a regulated Upper Midwest electric utility with added manufacturing and plastics exposure. The company is poised to benefit from strength across its wind repowering, solar development, and regional transmission projects. Its manufacturing and plastics operations can also generate incremental cash, supporting reinvestment, balance-sheet flexibility, and shareholder returns. The dividend yield also adds a small cash return for investors.

Potential Risks

Profits can be lumpy because the non-utility segments track industrial demand and PVC pipe pricing, which can turn quickly. Regulatory outcomes in Minnesota and South Dakota, storm costs, and higher interest rates could also pressure returns and valuation.

Forecast

A Zacks Rank #2 is a constructive revision signal, but the Scores of B for Value, D for Growth, and F for Momentum suggest the market isn’t fully rewarding the story yet. The chart shows that the 2026 EPS estimates are choppy, and earnings surprises skew positive.

Free Research Report: OTTR

Methodology

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 4, 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

  1. Open a brokerage account.
     
  2. Research financials and dividend history.
     
  3. Decide between individual stocks or ETFs.
     
  4. 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.

Read more: Check out this today’s list of Best Stocks to Buy Now.

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