In this article, we will discuss the 10 Best Performing Utilities Stocks So Far in 2025.
The utility investors have had a strong 2024. Morningstar reported that utilities rose by 27%, including dividends, marking its best performance since 2000. The 2024 rally mitigated the 2023 woes, resulting in the fair valuation of utilities. Notably, the valuations fully showcase the AI-related energy demand growth potential. Even though utilities have outperformed the market in 2 of the last 3 years, the sector’s 7% average return since 2021 remains in line with the sector’s 40-year average.
Growth Drivers for Utilities in 2025
As per Fidelity, America is at an inflection in power demand, with a favourable outlook for utilities. The electrification and the growth of AI continue to act as tailwinds for exponential growth in the sector. The technology of AI has been acting as a significant boost to predicted energy demand over the upcoming decade. AI needs significant computational power, storage space, and low-latency networking for training and running models. Such applications are generally hosted in data centers. With AI becoming more common, the energy demands from data centers are expected to grow exponentially, which can translate to increased earnings growth for utilities.
As a result of such trends, the energy demand is expected to grow more than 38% over the upcoming 2 decades, believes Fidelity. Regulated utilities are required to build new power plants in a bid to satisfy this demand surge. With reserve margins tightening, power prices for existing energy are also expected to increase. Therefore, the investment firm believes that the transition of power fleet to electrification and the growth of AI are durable trends, which are expected to support utilities for years to come.
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Investing in Utilities
Morningstar believes that income-focused investors have favored utilities because of their stable cash flows and high dividend payout ratios. The firm believes that utilities are a defensive play for investors during economic downturns, providing steady returns even during the volatile market. Furthermore, utilities’ focus on sustainable energy investments and grid modernization results in creating opportunities for long-term growth, further strengthening their appeal as income-generating assets.
Utility companies that effectively steer through regulatory landscapes, make investments in infrastructure, and embrace innovation are expected to sustain their competitive advantages. Numerous factors are expected to drive renewed growth in electricity demand, including the proliferation of EVs, and the surge of data centers driven by advancements in AI. As per Morningstar, such factors reflect strong opportunities for utilities to expand services and infrastructure to cater to dynamic electricity needs.
With this in mind, let us look at the 10 Best Performing Utilities Stocks So Far in 2025.
A row of utility poles and power lines, showing the reach of the electric utility operations.
Our Methodology
To list the 10 Best Performing Utilities Stocks So Far in 2025, we used a screener to shortlist the stocks catering to the utility sector. Next, we chose the stocks that have increased the most on a YTD basis. Finally, the stocks were ranked in ascending order of their YTD performance, as of February 19. We also mentioned hedge fund sentiments around each stock, as of Q4 2024.
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10 Best Performing Utilities Stocks So Far in 2025
10) Vistra Corp. (NYSE:VST)
% Gain on a YTD Basis: 13.1%
Number of Hedge Fund Holders: 120
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. Evercore ISI resumed coverage of the company’s stock with an “Outperform” rating and a price target of $202. The firm expects Vistra Corp. (NYSE:VST) to build on its 2024 momentum, with expected EBITDA and cash flow upside fueled by increased power curves and a possible large customer load power supply contract. Elsewhere, BMO Capital upped the company’s price target to $191 from $151, keeping an “Outperform” rating.
Vistra Corp. (NYSE:VST)’s integrated model, combining retail and generation with strong commercial acumen, has been delivering results for many stakeholders. Furthermore, the company continues to make progress on its plans to develop up to 2,000 MW of gas-fueled generation capacity. Vistra Corp. (NYSE:VST) has been growing its fleet of zero-carbon resources, advancing its interests via cost-effective and strategic investments.
Overall, Vistra Corp. (NYSE:VST) remains well-placed to reap the benefits from the growth of the broader utility sector because of its focus on a diverse power generation fleet, exposure to retail electricity markets, and expansion into storage and renewables. Meridian Funds, managed by ArrowMark Partners, released its Q3 2024 investor letter. Here is what the fund said:
“Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company, primarily serving Texas and the Midwest. We own Vistra because we expect power markets to continue tightening as baseload supply declines, coupled with rising demand from data centers, electric vehicles, and manufacturing reshoring. These factors create a favorable pricing environment for Vistra’s generation fleet, especially its nuclear and gas assets. The stock performed well during the period for three key reasons: tightening energy markets and strengthened pricing in forward-year energy contracts, the continuation of Vistra’s aggressive share repurchase program, and the company’s announced plan to acquire the remaining interest in Vistra Vision at an attractive valuation. Additionally, the company reaffirmed its 2024 guidance, indicating that results are trending toward the upper end of the previously projected range. We took advantage of the stock’s strength this quarter to trim our position.”
9) UGI Corporation (NYSE:UGI)
% Gain on a YTD Basis: 15.4%
Number of Hedge Fund Holders: 27
UGI Corporation (NYSE:UGI) is engaged in the distribution, storage, transportation, and marketing of energy products and related services. Jefferies has a positive outlook on the company’s stock and has expressed confidence in the company’s turnaround strategy. The plan consists of initiatives like bolstering of AmeriGas division, divestment of international assets, and realizing potential upside in gas marketing. UGI Corporation (NYSE:UGI)’s efforts, together with positive market conditions, are expected to fuel performance over the near term.
UGI Corporation (NYSE:UGI) highlighted that disciplined execution within its natural gas and international propane businesses together with a renewed focus on the operational performance at AmeriGas resulted in a 14% growth in Q1 2025 in adjusted diluted EPS over the prior year. The company’s natural gas businesses were aided by robust gas demand and elevated levels of gas rates at the West Virginia gas utility.
UGI Corporation (NYSE:UGI) remains focused on driving operational improvements, mainly at AmeriGas Propane, where it has been emphasizing enhancing business processes, commercial practices, and service quality. Such operational improvements together with disciplined capital allocation, strategic portfolio optimization, and robust balance sheet management will place UGI Corporation (NYSE:UGI) well to deliver consistent growth.
8) Talen Energy Corporation (NASDAQ:TLN)
% Gain on a YTD Basis: 17%
Number of Hedge Fund Holders: 77
Talen Energy Corporation (NASDAQ:TLN) is an independent power producer and infrastructure company, that produces and sells electricity, capacity, and ancillary services into wholesale power markets. BofA initiated coverage of the company’s stock, providing a “Buy” rating and a price target of $253. The firm is optimistic about the lucrative AWS data center contract for the Susquehanna nuclear plant, newly proposed RMR rates, and the anticipations of increased power prices.
Elsewhere, JPMorgan analyst Jeremy Tonet upped the price target for Talen Energy Corporation (NASDAQ:TLN)’s stock to $295 from $288, maintaining an “Overweight” rating. The analyst highlighted the RMR settlement for the Brandon Shores and H.A. Wagner plants, allowing the company to operate until May 31, 2029. The settlement will provide fixed payments to Talen Energy Corporation (NASDAQ:TLN) at $312/MW-day ($145 million annually) and $137/MW-day ($35 million annually) to operate Brandon Shores and H.A. Wagner, respectively.
ClearBridge Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“We added several new positions during the quarter and updated our utilities and energy exposure. In utilities, we bought Talen Energy Corporation (NASDAQ:TLN), an independent power producer which sells electricity, capacity, and ancillary services into wholesale power markets, which we funded by exiting our position in Constellation Energy. Although both companies are merchant power producers that stand to benefit from higher power prices as AI data centers are brought online, we believe that Talen’s stock price has milder embedded expectations than does the more optimistic Constellation. As a result, we believe that Talen represents a much more attractive risk/reward tradeoff that still capitalizes on the strong, long-term trend toward higher power prices.”
Hedge Fund Resource Center