The Best Utilities Stocks to Buy

Utilities stocks appeal to investors for a few different reasons.

• They are considered defensive investments, as demand for electricity, water, and gas remains stable regardless of economic conditions.
• Many offer attractive yields and therefore appeal to investors who like high-dividend stocks.
• Utilities companies often operate in regulated industries, providing consistent revenue and earnings, which can reduce volatility in a portfolio.

Over the past 12 months, the Morningstar US Utilities Index rose 17.17%, while the Morningstar US Market Index gained 14.71%.

The 9 Best Utilities Stocks to Buy Now

These were the most undervalued utilities stocks that Morningstar’s analysts cover as of Feb. 4, 2026.

1. Edison International EIX
2. PG&E PCG
3. American Water Works Company AWK
4. Essential Utilities WTRG
5. Duke Energy DUK
6. Eversource Energy ES
7. Portland General Electric POR
8. Alliant Energy LNT
9. American Electric Power Company AEP

To come up with our list of the best utilities stocks to buy now, we screened for:

• Utilities stocks that are undervalued, as measured by our price/fair value metric.
• Stocks that earn narrow or wide Morningstar Economic Moat Ratings, as well as companies that do not have a moat. We think companies with narrow economic moat ratings can fight off competitors for at least 10 years; wide-moat companies should remain competitive for 20 years or more.
• Stocks that earn a Low, Medium, High, or Very High Morningstar Uncertainty Rating, which captures the range of potential outcomes for a company’s fair value.

Here’s a little more about each of the best utilities stocks to buy, including commentary from the Morningstar analysts who cover each company. All data is as of Feb. 4, 2026.

Edison International

• Morningstar Price/Fair Value: 0.79
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 5.53%
• Industry: Utilities – Regulated Electric

Regulated electric company Edison International is the most affordable stock on our list of the best utilities stocks to buy. Edison International is the parent company of Southern California Edison, an electric utility that distributes electricity to 5 million customers in a 50,000-square-mile area of Southern California, excluding Los Angeles. The stock is trading 21% below our fair value estimate of $80 per share.

Before the Southern California wildfires began in early January, Edison International was well-positioned to grow faster than most utilities as California pursued ambitious clean energy targets. Now Edison faces legal, regulatory, and operational challenges related to the Eaton fire.

California’s quest to eliminate carbon emissions from its economy by 2045 will require a huge buildout of the state’s electric grid infrastructure. This includes investments to support grid safety, renewable energy, electric vehicles, distributed generation, and energy storage.

We forecast Edison will invest more than $7 billion annually for at least the next five years, resulting in 7% annual earnings growth off 2024 earnings, excluding one-time fire-related impacts.

Constructive regulatory outcomes like Edison’s 2025-28 general rate case provide near-term clarity for Edison’s investment plan. Operating-cost discipline will be critical for Edison to avoid large customer bill increases related to its investment plan.

Large equity issuances in 2019 and 2020—in part to fund the company’s $2.4 billion contribution to the state wildfire insurance fund and a higher equity allowance for ratemaking—along with higher borrowing costs have weighed on earnings growth the past five years.

Recovering $3.6 billion of costs from customers related to the 2017-18 disasters will bring in substantial cash in 2025-26, reducing interest costs. However, Edison could face higher financing costs to restore its system following the 2025 fires. Edison should be able to avoid any large liabilities like in 2017-18 if regulators and politicians uphold California’s AB 1054 and SB 254 legislation.

Even if Edison faces modest 2025 fire costs and liabilities, we think it will be able to continue its streak of 21 consecutive annual dividend increases.

Edison’s management team seems committed to retaining a small share of unregulated earnings likely tied to low-risk energy management businesses wrapped into Edison Energy. We don’t expect that business to have a material impact on shareholder returns in the near term.

Read more about Edison International here.

PG&E

• Morningstar Price/Fair Value: 0.83
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 1.23%
• Industry: Utilities – Regulated Electric

PG&E is a holding company whose main subsidiary is Pacific Gas and Electric, a regulated utility operating in Central and Northern California that serves 5.3 million electricity customers and 4.6 million gas customers in 47 of the state’s 58 counties. This cheap stock looks 17% undervalued and has a fair value estimate of $19.50 per share.

PG&E emerged from bankruptcy in July 2020 after 17 months of negotiations with 2017-18 Northern California fire victims, insurance companies, politicians, lawyers, and bondholders. Shareholders lost some $30 billion of value from settlements, fines, and costs but retained control of the company. Bondholders were mostly made whole.

PG&E now is well positioned for growth. California has aggressive energy and environmental policies that will require substantial infrastructure investment. We expect PG&E to invest more than $13 billion annually on average in 2026-30, leading to 9% annual earnings growth, one of the highest growth rates among US utilities.

California has constructive utility rate regulation that includes usage-decoupled rates, four-year rate reviews, and allowed returns above the industry average. The 2023-26 general rate case ended with what we consider a constructive outcome that supports PG&E’s investments in clean energy and safety. PG&E’s 2027-30 rate proposal extends its growth plan.

California aims to eliminate all carbon emissions from its economy by 2045, in part by electrifying buildings and transportation. This upside for PG&E’s electric business is partially offset by the uncertain future of PG&E’s natural gas business, which will likely shrink as a share of earnings.

PG&E will always face public and regulatory scrutiny as the largest utility in California. Deadly wildfires and power outages have escalated that scrutiny. Legislative and regulatory changes during and since PG&E’s bankruptcy have reduced the company’s financial risk, but the state’s inverse condemnation strict liability standard remains a concern. Mending PG&E’s relationships with customers, regulators, politicians, and investors will take time.

The $59 billion bankruptcy was PG&E’s second in 20 years. The 2020 bankruptcy exit terms all but guarantee a state takeover if PG&E has any major safety or operational missteps. PG&E also faced fines and penalties related to the deadly 2010 San Bruno gas pipeline explosion and poor recordkeeping, resulting in what we estimate was $3 billion of lost shareholder value.

Read more about PG&E here.

American Water Works Company

• Morningstar Price/Fair Value: 0.89
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 2.66%
• Industry: Utilities – Regulated Water

Next on our list of the best utilities stocks to buy is American Water Works Company. American Water Works is the largest investor-owned US water and wastewater utility, serving nearly 4 million customers in 14 states. The stock is trading at an 11% discount to our fair value estimate of $140 per share.

American Water Works’ earnings growth is consistently higher than most regulated electric utilities even though core retail water use has steadily fallen as a result of efficiency savings.

American Water Works’ earnings growth is supported by the company’s plan to invest $17 billion-$18 billion from 2025-29. Capital deployment is supported by mostly constructive regulatory frameworks across its jurisdictions.

The company is replacing and upgrading infrastructure that is decades-old across its system, resulting in significant organic growth. Additionally, we expect the company to grow by acquiring small, typically municipal-owned water systems. While some of the company’s peers have had difficulty closing municipal water acquisitions, American Water continues to execute on identifying and closing acquisitions, a competitive advantage against its peers.

Fair market value laws in several states support American Water Works’ acquisition strategy. These laws require the company to pay municipalities at least the assessed value of the system it acquires and allow American Water Works to add these assets to rate base at the assessed value rather than historical cost. The municipalities benefit by ensuring they get fair prices, and American Water Works shareholders benefit by ensuring the company doesn’t overpay for growth. In many cases, these deals are immediately value-accretive. The pipeline for future acquisitions remains very healthy.

The company’s regulatory strategy is to work proactively with regulators to ensure timely recovery of rising costs and gain support of continued investments. This has helped the company mitigate the headwinds of rising operating and interest costs. Management consistently delivers on a busy regulatory calendar. Rate cases are in progress at three subsidiaries.

The company’s only nonregulated business is the small military service group, which produces regulated-like earnings based on long-term government contracts that are longer than 30 years.

In October 2025, American Water announced plans to acquire Essential Utilities in an all-stock, tax-free merger, scheduled to close in the first quarter of 2027.

Read more about American Water Works Company here.

Essential Utilities

• Morningstar Price/Fair Value: 0.89
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.66%
• Industry: Utilities – Regulated Water

Essential Utilities is a Pennsylvania-based holding company for US water, wastewater, and natural gas distribution utilities. Trading 11% below our fair value estimate, Essential Utilities has an economic moat rating of narrow. We think shares of this stock are worth $42 per share.

American Water Works’ proposed $63 billion merger with Essential Utilities including debt will create the largest investor-owned water utility in the US by a large margin. Essential shareholders will own about 31% of the combined entity if it receives all state and regulatory approvals, likely in early 2027.

Essential Utilities—formerly Aqua America—transformed itself in 2020 with its $4.3 billion acquisition of Peoples Natural Gas. Peoples contributes about one-third of earnings and is set to grow faster than the water business in the near term.

Gas earnings growth is making up for slowing municipal water acquisitions, which have long been an important growth driver. On a stand-alone basis, we expect 6% annual earnings growth during the next three years based on planned gas and water infrastructure investments that are above historical levels.

Essential, like American Water Works, has a long and successful record of acquiring small, typically municipal, water systems. Fair market value laws in certain states encourage this consolidation. These laws require Essential to pay assessed value for a municipal system but also allow it to add the system assets at that assessed value, effectively eliminating goodwill. The municipalities benefit by ensuring they get fair prices, and Essential shareholders benefit by ensuring the company doesn’t overpay for growth.

In the US, 85% of the population is served by a municipal water utility, so there are plenty of acquisition opportunities. Tighter environmental standards, particularly involving per- and polyfluoroalkyl substances, could push municipalities to seek out acquirers like Essential that have greater scale and expertise.

Stand-alone earnings growth could trend higher if Essential can close the pending $276.5 million Delcora acquisition and increase water acquisitions. Essential shareholders should benefit from American Water Works’ faster long-term earnings growth outlook if this merger closes.

Read more about Essential Utilities here.

Duke Energy

• Morningstar Price/Fair Value: 0.93
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.49%
• Industry: Utilities – Regulated Electric

Duke Energy is one of the largest US utilities, with regulated utilities in the Carolinas, Indiana, Florida, Ohio, and Kentucky that deliver electricity to more than 8 million customers. The firm earns a narrow economic moat rating, and the shares of its stock look 7% undervalued relative to our $131 fair value estimate.

Duke Energy is one of the largest regulated utilities in the United States. It has significant regulatory clarity across its numerous subsidiaries, with the majority of investment recovered through customer ratemaking mechanisms that significantly reduce regulatory lag.

Florida is Duke’s most constructive and attractive jurisdiction, with higher-than-average growth and best-in-class regulation that allows for higher-than-average returns on equity, forward-looking rates, and automatic base-rate adjustments.

In North Carolina, Duke’s largest service territory, the outlook has improved significantly. Legislation allows for multiyear rate plans, including rate increases for projected capital investments.

Duke’s recent rate case outcomes at both of its Carolina utilities have included increases in allowed returns on equity and thicker equity layers. State legislation allows for performance incentive mechanisms, usage-decoupled rates for residential customers, and supports utilities’ investments.

Indiana also historically has been constructive. Duke’s subsidiary in the state is allowed to use forward test years and above-average return on equity to set rates. Regulators support Duke’s investments in new natural gas generation, renewable energy, and battery storage.

Residential and commercial customer electricity demand growth remains a significant tailwind for Duke. Annual customer demand growth remains over 2% at its Carolinas and Florida subsidiaries. Data center demand is expected to grow to more than 10% of commercial load by 2029.

Duke’s current 1.5%-2% annual growth in electricity demand accelerates to 3%-4% beginning in 2027, supporting additional capital investment and growth. Indiana and the Carolinas are well-positioned to capture data center demand.

We expect Duke to invest more than $103 billion through 2029, in line with management’s updated plan and supporting our expectations for earnings growth at the high end of management’s 5%-7% annual earnings growth range.

Duke has used portfolio monetization to fund a portion of its growing capital investment needs, selling its Tennessee natural gas distribution utility and a minority interest in its Florida utility.

Read more about Duke Energy here.

Eversource Energy

• Morningstar Price/Fair Value: 0.93
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 4.62%
• Industry: Utilities – Regulated Electric

Eversource Energy is a diversified holding company with subsidiaries that provide rate-regulated electric, gas, and water distribution service to more than 4 million customers in the Northeast US. The stock is trading at a 7% discount to our fair value estimate of $73 per share.

Eversource Energy has returned to its roots as a mostly rate-regulated electric and gas distribution utility in the Northeast after exiting a multiyear effort to develop several large offshore wind projects.

Even though New England doesn’t have the data center or manufacturing growth like many other US regions, we think Eversource’s utilities have ample growth opportunities to build electric and gas infrastructure to support the Northeast states’ aggressive clean energy goals.

We assume Eversource invests $24 billion in 2025-29 to help meet regional clean energy targets and strengthen the grid. This should support 6% annual average earnings and dividend growth. Financing that growth became a bigger challenge after Connecticut regulators killed Eversource’s $2.4 billion Aquarion sale in November 2025.

Some state regulators have pushed back on customer rate increases, limiting the upside for shareholders. Connecticut has a long history of challenging rate regulation. However, subsidiary Connecticut Light and Power represents only about 20% of Eversource’s consolidated earnings.

Massachusetts remains an attractive area for investment with constructive regulation, support for grid modernization investments, and ambitious clean energy legislation. Almost all of Eversource’s revenue is decoupled from usage, supporting consistent cash flow growth.

Electric transmission also remains a key earnings growth driver. Eversource has averaged $1 billion of investment in transmission annually for the last decade, and we expect that to continue. Transmission earnings are more than 40% of consolidated earnings and climbing. Transmission to connect offshore wind projects is a growth opportunity.

Eversource was one of the first US utilities to pursue offshore wind development, but management reversed course in 2022. It took nearly $2 billion of impairment charges after tax in 2023 to exit its 50% stake in three projects. Despite the losses, Eversource will avoid potential cost overruns and have more flexibility to fund growth projects with regulated returns at its utilities.

Read more about Eversource Energy here.

Portland General Electric

• Morningstar Price/Fair Value: 0.94
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.14%
• Industry: Utilities – Regulated Electric

Portland General Electric is a regulated electric utility providing generation, transmission, and distribution services in a service territory that includes about half of all Oregon residents and two-thirds of the state’s business activity. The firm earns a narrow economic moat rating, and the shares of its stock look 6% undervalued relative to our $54 fair value estimate.

Portland General Electric has plenty of investment opportunities to serve growing electricity demand, meet Oregon’s clean energy requirements, and strengthen the system against natural disasters such as wildfires.

Oregon legislation requires PGE to cut carbon emissions on its system by 80% by 2030 and eliminate carbon emissions by 2040. Achieving these goals while maintaining reliability will require a large step-up in investment during the next decade.

PGE plans to invest $6.5 billion during the next five years, more than a 20% increase in its investment rate of the last decade. State clean energy requirements could add more than $1 billion to that plan by 2030. Transmission is another key investment area in the outer years of the company’s plan.

Regulatory support for this growth plan will be critical. Oregon regulation is mostly constructive, with forward-looking rates and timely decisions. The state’s 20-year integrated resource plan and four-year action plan give PGE and regulators clarity on potential growth investments.

An unfavorable decision in PGE’s 2025 general rate case, including a slight reduction in its allowed return on equity to 9.34%, was a shift from recent years. PGE had settled its previous four rate reviews—most recently in late 2023—demonstrating support from many stakeholders. The 2023 settlement also included initial steps to reduce volatility due to PGE’s power price exposure, unusual among US-regulated utilities. PGE received less favorable regulatory outcomes in 2015 and 2016.

Electricity demand growth in the region should reduce regulatory risk as costs are spread over a larger customer base. PGE also benefits from renewable energy-specific ratemaking, reducing the need for lengthy base rate reviews.

The board created some uncertainty when it skipped a dividend increase in April 2020 before raising it in July 2020, keeping PGE’s annual dividend growth streak intact. We think dividend growth will trail earnings growth slightly while PGE goes through this large investment cycle.

Read more about Portland General Electric here.

Alliant Energy

• Morningstar Price/Fair Value: 0.94
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.08%
• Industry: Utilities – Regulated Electric

Alliant Energy is the parent of two regulated utilities, Interstate Power and Light and Wisconsin Power and Light. Alliant Energy is an affordable utilities stock, trading at a 6% discount to our fair value estimate of $71 per share. The regulated electric company earns a narrow economic moat rating.

Alliant Energy operates two utilities in the Midwest, Wisconsin Power and Light and Interstate Power and Light, which operates in Iowa.

Management increased its 2026-29 capital investment plan to $11.5 billion, nearly double its investment plan less than four years ago. The increase is in large part to support increasing data center electricity demand. Alliant forecasts 12% electric sales growth from 2025-30.

We expect continued investments to support this growth. Management has said they are continuing to plan for growth beyond its base case. We forecast the company will achieve the high end of management’s 5%-7% annual earnings growth target through 2027, and exceed management’s 7%-plus growth expectation from 2027-29.

Alliant has four data center customers as of late 2025, representing 3 gigawatts of demand and supporting 12% annual sales growth from 2025-30. We think management will continue to identify additional data center opportunities.

Three data center campuses have started construction in Alliant’s service territory. A fourth customer has signed an electric service agreement. Negotiations for an additional 2-4 GW of demand could materialize later in the planning period.

Alliant benefits from operating in two constructive regulatory jurisdictions. To maintain earned returns near allowed returns during this period of high investment, management has worked to reduce regulatory lag, received above-average allowed returns across its subsidiaries, and aims continue to reduce operating costs for the near term.

Wisconsin regulators approved subsidiary WPL’s 2026-27 rate case settlement, including a 9.8% allowed return on equity. The decision was in line with our expectations and supports our constructive view of Wisconsin regulation.

American Transmission Co., which we consider a wide-moat business, is tucked away from consolidated results (16% equity interest). Transmission offers higher returns relative to other rate-regulated investments.

Read more about Alliant Energy here.

American Electric Power Company

• Morningstar Price/Fair Value: 0.94
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.17%
• Industry: Utilities – Regulated Electric

Regulated electric company American Electric Power Company rounds out our list of best utilities stocks to buy. American Electric Power is one of the largest regulated utilities in the United States, providing electricity generation, transmission, and distribution to more than 5 million customers in 11 states. The stock is 6% undervalued relative to our fair value estimate of $127 per share.

American Electric Power operates numerous utilities, providing investors with protection against any single adverse regulatory ruling. The majority of the company’s capital investment plan focuses on regulated investments. This investment supports management’s 7% to 9% earnings growth target from 2026-30, which we view as achievable at the high end.

AEP plans to invest $72 billion in 2026-30, up from the company’s previous $54 billion investment plan. AEP’s expected system peak could increase to 65 GW by year-end 2030, up from 37 GW currently. Data centers account for 80% of this incremental load. The incremental demand is supported by either signed energy service agreements or letters of agreement, which give us confidence in the company’s growth outlook.

AEP’s plan focuses on transmission and distribution investments, which we think are the most attractive long-term growth opportunities, given federal incentives to improve the efficiency of the US power grid. Transmission and distribution investments account for nearly two-thirds of AEP’s five-year capital investment plan. We think that environmental regulations, aging infrastructure, accelerating energy demand, and renewable energy growth support a long-term runway for transmission growth at the unit level.

AEP plans to invest in new natural gas generation, for which it has secured turbines, and in renewable energy across its subsidiaries.

We expect AEP to narrow the gap between earned and allowed returns gradually. This will require constructive regulatory and legislative outcomes across its subsidiaries.

AEP is managing numerous strategic initiatives. AEP recently sold its commercial renewable energy portfolio and is now selling its retail and distributed resources business. It also recently sold a 19.9% interest in Ohio and Indiana & Michigan Transmission Companies, with proceeds to be used to reduce equity needs and support capital investment.

Read more about American Electric Power Company here.

How to Find More of the Best Utilities Stocks to Buy

Investors who’d like to extend their search for top utilities stocks can do the following:

• Review Morningstar’s comprehensive list of utilities stocks to investigate further.
• Stay up to date on the utilities sector’s performance, key earnings reports, and more with Morningstar’s utilities sector page.
• Read Morningstar’s Guide to Stock Investing to learn how our approach to investing can inform your stock-picking process.
• Use the Morningstar Investor screener to build a shortlist of utilities stocks to research and watch.