Electric utility stocks are publicly traded companies regulated by government agencies. They make money by providing reliable energy to customers. Here's a closer look at how to invest in the electric utility industry.
The best electric utility stocks to buy now
Several publicly traded companies operate electric utilities, giving investors lots of options in this sector. Five that stand out as being among the best in the electric utility sector are:
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| NextEra Energy (NYSE:NEE) | $176.6 billion | 2.67% | Electric Utilities |
| Duke Energy (NYSE:DUK) | $91.3 billion | 3.59% | Electric Utilities |
| Xcel Energy (NASDAQ:XEL) | $44.4 billion | 3.04% | Electric Utilities |
| Dominion Energy (NYSE:D) | $50.9 billion | 4.48% | Multi-Utilities |
| Consolidated Edison (NYSE:ED) | $37.5 billion | 3.27% | Multi-Utilities |
Here's a look at what makes this group stand out as solid electric utility stock investments.
1. Duke Energy
NYSE: DUK
Key Data Points
Duke Energy is one of the largest power companies in the country. It operates two business segments:
- Electric utilities and infrastructure: Operates regulated utilities that serve 8.6 million retail electric customers in North Carolina, South Carolina, Florida, Indiana, Ohio, and Kentucky
- Gas utilities and infrastructure: Distributes natural gas to 1.7 million customers across North Carolina, South Carolina, Tennessee, Ohio, and Kentucky
Duke Energy's utility portfolio generates steady revenue regulated by government agencies that set its rates. That provides it with stable cash flow to pay dividends (it offered a more than 3.5% dividend yield in early 2026) and expand its utility businesses.
Duke Energy is investing a staggering $95 billion to $105 billion in capital products to enhance its operations and reduce its carbon footprint through 2030. Its investments should grow its earnings per share at an 8.5% annual rate through 2030, a healthy rate for a large utility.
This should give the company plenty of power to grow its dividend. These drivers should help it supply investors with an attractive total return of more than 10% annually.
2. NextEra Energy
NYSE: NEE
Key Data Points
NextEra Energy is one of the largest electric utilities in the country. It has two business platforms:
- Florida Power & Light (FPL): FPL is the country's largest electric utility, providing power to around 12 million people across Florida.
- Energy Resources: NextEra's energy resources segment is a leader in producing wind and solar energy. It also operates natural gas pipelines, electricity transmission lines, and renewable natural gas facilities.
NextEra Energy owns a significant interest in XPLR Infrastructure (NYSE:XIFR). The partnership owns and operates renewable energy-generating facilities and natural gas pipelines.
NextEra Energy's business segments generate stable cash flow from regulated rate structures and long-term contracts, helping to support a dividend that yielded almost 3% in early 2026.
The company has all the qualities an investor would want in an electric utility. It routinely has one of the highest credit ratings among large, rate-regulated electric utilities. It also typically has a lower-than-average dividend payout ratio, giving NextEra the financial flexibility to invest in cleaner energy while building more renewable power projects.
NextEra's current slate of investments (an industry-leading $295 billion to $325 billion from 2025 to 2032) should expand its earnings by more than 8% annually through 2035. Additionally, NextEra expects to increase its dividend by 10% in 2026 and at a 6% compound annual rate from that level in 2027 and 2028. That's above-average growth for the sector. It could help NextEra generate industry-leading total returns.
3. Xcel Energy
NASDAQ: XEL
Key Data Points
Xcel Energy operates four electric and natural gas utilities across eight states in the central United States. Its utilities serve 3.9 million electric customers and 2.2 million natural gas customers. The energy businesses generate predictable rate-regulated revenue, giving Xcel Energy the power to support an attractive dividend that yielded more than 3% in early 2026. The company has raised its dividend for 22 straight years.
Xcel Energy plans to invest $60 billion of capital through 2030. This investment level should power 6% to 8%+ annual earnings per share growth. That combination of income and growth could give Xcel Energy the power to produce attractive total shareholder returns of more than 10% annually.
4. Dominion Energy
NYSE: D
Key Data Points
Dominion Energy provides regulated electricity service to 3.6 million customers in Virginia, North Carolina, and South Carolina. The company also provides natural gas to 500,000 customers in South Carolina.
The utility expects to invest more than $50 billion through 2029 to support growing power demand in its service areas. Data centers are a major factor driving power demand, especially in Virginia.
It's investing in a variety of projects, including building a massive offshore wind farm in Virginia that should be operational in 2026. These investments should grow the company's earnings per share at a 5% to 7% annual rate.
Dominion's growing earnings should make its high-yielding dividend (around a 4.5% yield in early 2026) more sustainable. The company plans to maintain its current dividend rate during its heavy investment phase and start increasing the payment once its payout ratio reaches a more conservative level.
5. Consolidated Edison
NYSE: ED
Key Data Points
Consolidated Edison delivers electricity, gas, and steam to customers in the New York City area. The company has three business segments:
- Consolidated Edison Company of New York: This regulated utility delivered electricity to 3.7 million customers and natural gas to 1.1 million. It also delivered steam to 1,500 customers via the largest steam system in the country.
- Orange and Rockland Utilities: This utility delivered electricity to 300,000 customers and gas to more than 100,000 customers.
- Consolidated Edison Transmission: This business segment invests in electricity transmission projects.
Consolidated Edison's utility operations generate very stable cash flow to support its dividend (nearly 3.5% yield in early 2026). The company has increased its dividend for 51 straight years, the longest streak of any utility in the S&P 500. It qualified Consolidated Edison for the elite group of Dividend Kings, companies with 50 or more years of annual dividend increases.
The utility is in an excellent position to continue increasing its dividend. Con Ed had identified $72 billion of potential investments through 2034 to support the safety and reliability of its operations and reduce its carbon emissions. These investments should support steady earnings and dividend growth in the coming years.
How to find the best electric utility stocks
It's important to know how to analyze electric utility businesses. That will allow you to find companies with the potential to generate attractive total returns. Three main factors have contributed to strong performance in the sector over the years:
1. Financial strength
Having a strong financial profile is vital for an electric utility. It needs to fund the maintenance and expansion of its infrastructure while also paying an attractive dividend to its shareholders.
One of the key ways to gauge the financial strength of a utility is to see whether it has an investment-grade credit rating on its bonds. That's similar to a high credit score, suggesting the borrower is at low risk of defaulting on its debts. An investment-grade rating means a company can borrow money at lower interest rates and better terms.
2. A conservative dividend payout ratio
Utilities pay out a significant percentage of their earnings to investors via their dividends (usually around 65%). However, because financial strength is so important, investors should focus on electric utilities with lower-than-average dividend payout ratios. The lower ratios allow companies to retain more cash to finance growth, which enhances their financial strength.
3. Consistent earnings growth
The best utilities can steadily increase their earnings per share by investing in initiatives that earn high returns on investment. For example, utilities can improve their profitability by retiring aging and expensive coal-fired power-generation plants and replacing them with cheaper, cleaner ones powered by natural gas or renewables.
Likewise, they can increase their earnings by building out new renewable energy projects to support growing demand. Investors seeking electric utility stocks to buy should look for these three characteristics.
These strengths should provide a company with the financial flexibility to steadily expand its earnings and its dividend. Those factors help power an attractive total stock return to shareholders -- the combination of a stock's dividend yield and its stock price appreciation.
Why are electric company stocks good investments?
Electric utility companies have several features that make them attractive investments, including:
- Predictable revenue: It costs lots of money to build and maintain electricity-generating plants and electrical distribution systems, so governments give electric utilities a monopoly to operate in a specific region. Government entities then regulate these companies by approving the rates and fees they can charge customers for providing electricity. As a result, electric utilities generate predictable revenue -- a desirable feature for those seeking lower-risk investments.
- Steady growth: Electricity demand tends to be stable and rises steadily. Catalysts such as economic growth, increased digitalization, and the growing adoption of electric vehicles should power steady growth in demand in the coming decades. That should enable electric utilities to continue investing capital to expand their operations, supporting steady earnings growth.
- Attractive dividends: Electric utility stocks also typically pay investors a dividend, which is a cash payment of a portion of the company's profit. Utilities generally offer an above-average dividend yield -- the ratio of a company's annual dividend to its stock price -- because they choose to pay out a larger share of their profit instead of retaining it to expand their operations. The sector's higher dividend yields make these stocks attractive income investments for retirees.
How to invest in electric utility stocks
It's easy to add an electric utility to your portfolio. Here's a step-by-step guide on how to invest in electric utility stocks:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
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Future outlook for the electric sector
Over the last 20 years (2005-25), total electricity demand in the U.S. increased by a modest 10%. Most forecasters expect power demand to accelerate over the next 20 years, growing six times faster, or 58% overall, driven by data centers, increased electrification, and the onshoring of manufacturing. Accelerating power demand growth should provide electric utilities with significantly more expansion opportunities, which should drive faster earnings growth rates and higher total returns for investors.
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