Investors are increasingly looking at utility stocks as a safe haven for their portfolios, especially as demand for electricity continues to rise. According to the Deloitte 2026 Power and Utilities Industry Outlook, U.S. electricity demand surged in 2025, driven mainly by industrial electrification, artificial intelligence workloads, and transportation needs. The report projects peak demand will grow by 26% by 2035, with significant contributions from data centers and industrial sectors.
Utilities are facing challenges, including slow supply expansion and reliability constraints. Current forecasts indicate that while 93% of new capacity through July 2025 will be renewable, approximately 2 terawatts remain stuck in interconnection lines. Natural disasters have inflicted over $1 billion in damages in early 2025, prompting utilities to focus on firm capacity. The 2025 reconciliation bill has raised compliance standards while reducing incentives for green energy, further complicating the landscape.
Given this backdrop, here are eight of the most profitable utility stocks to consider for investment:
1. NextEra Energy, Inc. (NYSE:NEE)
TTM Net Income: $7.21 billion
TTM Net Income Margin: 20.81%
Number of Hedge Fund Holders: 72
NextEra Energy remains a standout choice. Recently, Jefferies raised its price target for the company to $88, citing a compound annual growth rate in profits of 9% through 2032. Both UBS and Morgan Stanley have maintained their positive ratings despite minor adjustments to their price targets, emphasizing the significant impact of data center demand on utility performance.
2. Duke Energy Corporation (NYSE:DUK)
TTM Net Income: $4.92 billion
TTM Net Income Margin: 15.97%
Number of Hedge Fund Holders: 62
Duke Energy has also attracted attention from analysts. UBS and Morgan Stanley recently adjusted their price objectives for the company, reflecting a cautious optimism regarding its future performance, particularly concerning data center demand. The company is also exploring new nuclear power opportunities, which could bolster its long-term strategy.
3. The Southern Company (NYSE:SO)
TTM Net Income: $4.46 billion
TTM Net Income Margin: 15.42%
Number of Hedge Fund Holders: 58
The Southern Company has been downgraded by some analysts, reflecting concerns over political and regulatory risks. While the stock has seen a modest year-to-date increase of 6.25%, the company’s future performance remains tied to the evolving utility landscape.
4. American Electric Power Company, Inc. (NASDAQ:AEP)
TTM Net Income: $3.66 billion
TTM Net Income Margin: 17.23%
Number of Hedge Fund Holders: 56
American Electric Power is gaining traction as a solid utility investment. Analysts predict an earnings growth rate of 8.8% through 2030, driven by increased retail power loads. The stock has risen 25.42% year-to-date, affirming its position among profitable utility stocks.
5. American Water Works Company, Inc. (NYSE:AWK)
TTM Net Income: $1.11 billion
TTM Net Income Margin: 21.93%
Number of Hedge Fund Holders: 53
American Water Works is the largest investor-owned water and wastewater company in the U.S. The company recently acquired the Hopewell Borough water system for $6.4 million, indicating a commitment to improving infrastructure and community service. Analysts remain cautiously optimistic about its future earnings potential.
6. Sempra (NYSE:SRE)
TTM Net Income: $2.11 billion
TTM Net Income Margin: 15.75%
Number of Hedge Fund Holders: 41
Sempra is navigating regulatory challenges but is still considered a strong investment. The company has reported potential after-tax charges related to regulatory decisions but remains focused on leveraging data center demand for growth.
7. Dominion Energy, Inc. (NYSE:D)
TTM Net Income: $2.61 billion
TTM Net Income Margin: 16.79%
Number of Hedge Fund Holders: 35
Dominion Energy has been vocal about the importance of its Coastal Virginia Offshore Wind Project, which is critical for meeting energy demands and national security. The company has warned that halting the project could lead to job losses and energy inflation, emphasizing its integral role in the grid’s stability.
8. Ameren Corporation (NYSE:AEE)
TTM Net Income: $1.41 billion
TTM Net Income Margin: 16.34%
Number of Hedge Fund Holders: 34
Ameren has adjusted its long-term earnings growth guidance to a compound annual rate of 6% to 8% from 2025 through 2029. Analysts have noted positive regulatory changes in Missouri, providing the company with investment opportunities despite challenges in Illinois.
In summary, the utility sector is becoming increasingly attractive as demand rises and companies adapt to regulatory changes. These eight stocks represent some of the most profitable options for investors looking to capitalize on a growing market. As always, potential investors should conduct thorough research and consider market conditions before making investment decisions.
