The utility sector has been charging higher over the past year. The Vanguard Utilities Index Fund ETF is up more than 11% over the last 12 months, a strong return for this typically sleepy sector. Utility stocks have gotten a boost from power demand to support AI.
The AI power surge is in the early stages and should drive strong growth for utilities in the coming years. Two top utility stocks to buy this February to capitalize on this growth trend are NextEra Energy (NEE +0.20%) and Dominion Energy (D +2.09%).
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Powerful growth for the next decade
NextEra Energy operates the country's largest electric utility (Florida Power & Light) and a leading clean energy infrastructure development company (NextEra Energy Resources). It's a leader in operating renewable energy.
The company is coming off a strong year. It grew its adjusted earnings per share by more than 8% in 2025, powered by Florida's growth and robust demand for renewable energy. The company placed 8.7 gigawatts of new generation and storage projects online last year. Meanwhile, its energy resources segment secured a record 13.5 GW of new projects last year, increasing its backlog to 30 GW.
NYSE: NEE
Key Data Points
This backlog helps underpin the company's long-term growth outlook. NextEra Energy expects to grow its earnings per share at a more than 8% annual rate through 2035. That supports its plan to hike its dividend by 10% this year and by 6% annually in 2027 and 2028. With a 2.5% current yield, NextEra Energy could generate 10%+ annualized total returns going forward.
Powering data center alley
Dominion operates electric utilities in Virginia and across the Carolinas. These entities are investing heavily to support the region's growing power demand.
NYSE: D
Key Data Points
Virginia, in particular, is experiencing robust power demand due to its status as the world's largest data center hub. Dominion is the industry leader in connecting data centers to power, supporting 450 facilities in the state. Power demand in Virginia surged 30% last year and should continue growing briskly. Dominion is in talks to supply up to 47 GW of power to data centers, a 17% increase over the past year.
That's driving Dominion's plan to invest $50 billion between 2025 and 2029 to support its utility operations, with the bulk of that spending in Virginia. One of its biggest investments is the $11.5 billion Coastal Virginia Offshore Wind project (50% funded by its partner Stonepeak), which will deliver nearly 3 GW of power. It's on track to start producing in the first quarter of this year, with full completion expected in early 2027.
These investments should power 5% to 7% annual earnings per share growth for the utility. Add in its more than 4%-yielding dividend (which it intends to maintain through this heavy investment phase), and Dominion could generate double-digit total annual returns.
High-powered total return potential
NextEra Energy and Dominion should be two of the biggest beneficiaries of the coming AI power surge. It should enable these utilities to deliver healthy earnings growth, which, when combined with their dividends, should fuel strong total shareholder returns. That high-powered total return potential makes them the top utility stocks to buy this month.
