In this article, we are going to discuss the best utility stocks to invest in according to hedge funds.
The utility sector emerged as one of the biggest winners of the AI boom. Major utility companies all over the country signed hefty contracts with hyperscalers to power their data centers, leading to commitments of billions of dollars of investments in the coming years.
However, bullish sentiment in the sector appears to have cooled following recent fears of an AI bubble, with investors concerned about whether the promised billions in investments will materialize. Moreover, recent earnings reports from these power companies have made investors realize that the expected growth in demand may actually come much more slowly than initially expected.
As a result, while the utilities group outperformed the market for most of the year, it has recently witnessed a pullback. The S&P Utilities index is now up 12.41% since the beginning of 2025, against gains of 15.44% by the overall S&P 500.
With that said, here are the Best Utility Stocks to Invest in.
Our Methodology
To collect data for this article, we reviewed companies in the utility sector and shortlisted those with the highest number of hedge fund investors as of the end of Q3, 2025, according to the Insider Monkey database. The following are the Best Utility Stocks to Buy According to Hedge Funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11. Dominion Energy, Inc. (NYSE:D)
Number of Hedge Fund Investors: 35
Dominion Energy, Inc. (NYSE:D) provides regulated electricity service to 3.6 million homes and businesses in Virginia, North Carolina, and South Carolina, and regulated natural gas service to 500,000 customers in South Carolina.
On December 16, Morgan Stanley analyst David Arco trimmed the firm’s price target on Dominion Energy, Inc. (NYSE:D) from $65 to $62, but maintained its ‘Equal Weight’ rating on the shares. The revised target still represents an upside potential of 4.5%, as of the writing of this piece. The analyst noted in his year-ahead vote that the utilities sector’s performance will depend heavily on growth from data centers and better growth in the coming year.
Earlier on December 11, JPMorgan also lowered its price target on Dominion Energy, Inc. (NYSE:D) from $62 to $59, and kept an ‘Underweight’ rating on the shares. The revised price target comes as part of the firm updating models in the North American utilities sector.
Dominion Energy, Inc. (NYSE:D) enjoys a unique position in Virginia’s ‘Data Center Alley’ and has connected 450 data centers already, with over 25% of its sales going to these power-hungry facilities in the state. Moreover, the company had approximately 47 GW of data-center supply in various stages of contracting as of September 2025, up from around 40 GW as of December 2024.
10. Eversource Energy (NYSE:ES)
Number of Hedge Fund Investors: 41
Eversource Energy (NYSE:ES) operates New England’s largest energy delivery system and serves customers in Connecticut, Massachusetts, and New Hampshire.
On December 12, JPMorgan lowered its price target on Eversource Energy (NYSE:ES) from $72 to $71, while maintaining an ‘Underweight’ rating on the shares. The revised target, still indicating an upside potential of almost 4% from the current share price, comes as the analyst firm updated models in the North American utilities group.
That said, BofA instead raised its price target on Eversource Energy (NYSE:ES) from $72 to $75 on December 5, while keeping its ‘Buy’ rating on the shares. The update comes after the firm hosted an investor trip to Eversource’s Cambridge underground substation and then met with the company’s CFO, John Moreira, to discuss the utility’s regulatory roadmap. As a result, BofA increased its EPS forecasts for Eversource for the 2026-29 period.
It is worth noting that last month, Eversource Energy (NYSE:ES) reaffirmed its 5-year capital plan of $24.2 billion through 2029. Moreover, the company continues to see additional capital investment opportunities of $1.5 billion to $2 billion within the forecast period.
Eversource Energy (NYSE:ES) also declared a quarterly dividend of $0.7525 per share on December 3 and currently boasts an impressive annual dividend yield of 4.43%, putting it among the 14 Best Utility Dividend Stocks to Buy Now.
