In this article, we are going to discuss the 12 best utility stocks to buy now according to hedge funds.
Utilities are generally considered defensive investments, as the demand for electricity, water, and gas remains stable regardless of macroeconomic conditions. As of the writing of this piece, the S&P 500 Utilities index has surged by 7.04% since the beginning of 2026, slightly underperforming the gains of 7.23% posted by the overall S&P 500 during the period.
According to the Energy Information Administration (EIA)’s Short-Term Energy Outlook earlier this month, the US electricity demand is expected to rise from a record 4,195 billion kWh in 2025 to 4,271 billion kWh this year, and then grow further to 4,397 billion kWh in 2027. The soaring demand comes primarily from the sprawling data centers dedicated to AI and cryptocurrency, domestic manufacturing growth, and the general electrification of different sectors.
As more and more data centers pop up across America, the Edison Electric Institute estimates that utilities will invest $1.4 trillion between 2026 and 2030, up from $1.3 trillion spent during the entire prior decade. The combination of a robust demand and rising investments positions the sector to continue delivering strong growth and also sustain its high shareholder returns in the years to come.
With that said, here are the Best Utility Stocks to Buy in 2026.
Our Methodology
To collect data for this article, we used our screeners to identify utility stocks with the highest number of hedge fund holders at the end of Q1 2026, as per the Insider Monkey database. We then limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. 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. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
12. Dominion Energy, Inc. (NYSE:D)
Number of Billionaire Holders: 37
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 June 23, Barclays analyst Nicholas Campanella slightly lowered the firm’s price target on Dominion Energy, Inc. from $70 to $69, but kept an ‘Overweight’ rating on the shares. The revision comes as part of a Q2 earnings preview.
Dominion Energy, Inc. made headlines last month after it was reported that the company is set to be acquired by NextEra Energy in a $66.8 billion deal that will create the largest regulated electric utility in the world. The combined entity will be at the top in the US in total generation, generation built, annual CapEx, rate base, and market capitalization.
The transaction is expected to close in 12 to 18 months, subject to antitrust review, shareholder approval, and regulatory approvals. Barclays expects the merger applications to be submitted ahead of the company’s Q2 earnings call, with investor focus shifting to the regulatory approval process.
11. Consolidated Edison, Inc. (NYSE:ED)
Number of Hedge Fund Holders: 43
Consolidated Edison, Inc. (NYSE:ED) operates one of the largest energy delivery systems in the world, providing electric, gas, and steam service to the 10 million people and businesses across New York City and Westchester County.
On June 23, Argus trimmed its price target on Consolidated Edison, Inc. from $118 to $112, but reaffirmed its ‘Buy’ rating on the shares. The lowered target implies that the shares are fairly valued at the current levels.
Argus noted that Consolidated Edison’s earnings growth has been driven by regulatory increases, and the utility has already filed for further rate hikes for early 2026. The analyst firm also believes that the stock should benefit from improving fundamentals and a positive sector rotation, which has historically happened during periods of expected interest rate cuts.
However, Argus lowered its price objective on ED after the stock recently soared to its highest level in five years.
Consolidated Edison, Inc. boasts a rich dividend history, having grown its payouts for 54 consecutive years. The stock currently boasts an impressive annual yield of 3.17% and was recently placed in our list of the Top 11 Dividend Kings to Buy for Safe Dividend Growth.
10. Public Service Enterprise Group Incorporated (NYSE:PEG)
Number of Hedge Fund Holders: 49
Public Service Enterprise Group Incorporated (NYSE:PEG) is a predominantly regulated energy company that engages in the provision of electric and gas services.
On June 24, Morgan Stanley upped its price target on Public Service Enterprise Group Incorporated from $89 to $92, while reaffirming an ‘Overweight’ rating on the shares. The target boost indicates an upside potential of over 11% from the current share price.
The move comes after the analyst firm revised its price objectives for Regulated & Diversified Utilities / IPPs in North America for the month of May. Morgan Stanley noted that the utilities sector fell by 5.5% last month, significantly underperforming the gains of around 5.1% posted by the overall S&P during the period.
Public Service Enterprise Group Incorporated had a solid start to the year, exceeding estimates in its first quarter. The company reaffirmed its adjusted operating earnings guidance in the range of $4.28 to $4.40 per share for full-year 2026. Moreover, it reiterated its long-term adjusted earnings growth outlook to 6%-8% through 2030, citing robust regulated investments and nuclear generation cash flows as key drivers.
9. Entergy Corporation (NYSE:ETR)
Number of Billionaire Holders: 50
Entergy Corporation (NYSE:ETR) is an integrated US energy company that provides electricity to more than 3 million utility customers in Arkansas, Louisiana, Mississippi, and Texas.
On June 24, Morgan Stanley analyst David Arcaro lifted the firm’s price target on Entergy Corporation from $94 to $103, while reiterating an ‘Equal Weight’ rating on the shares. The target boost, which still indicates a downside of over 11% from the current levels, comes after Morgan Stanley updated its price objectives for Regulated & Diversified Utilities / IPPs in North America for the month of May.
The analyst firm noted that the utilities sector declined by 5.5% last month, significantly falling behind the gains of around 5.1% delivered by the overall S&P during the period.
In its latest earnings call, Entergy reaffirmed its adjusted earnings target of $4.25 to $4.45 per share for full-year 2026. Moreover, the utility raised its long-term adjusted EPS guidance, increasing its 2027 forecast by $0.20 and 2029 outlook by $0.50 to $6.40 per share. The improved guidance comes on the back of an expected 8.5% compound annual retail sales growth through 2029, including an annual industrial growth of 16%.
Entergy Corporation was also recently included in our list of the 13 Best Electrical Infrastructure Stocks to Buy in 2026.
8. The Southern Company (NYSE:SO)
Number of Hedge Fund Holders: 54
The Southern Company (NYSE:SO) is one of the largest producers of electricity in the United States and the largest wholesale provider in the Southeast.
On June 24, Morgan Stanley analyst David Arcaro upped the firm’s price target on The Southern Company from $87 to $89, but reaffirmed an ‘Underweight’ rating on the shares. The raised target still reflects a downside of more than 8% from the current share price.
Morgan Stanley adjusted its price objectives for North American Regulated & Diversified Utilities / IPPs as part of its monthly update. The firm noted that the overall utilities sector posted a decline of 5.5% in May, significantly underperforming the gains of around 5.1% delivered by the broader S&P during the month.
The Southern Company has an exceptional track record of having paid a quarterly dividend to its shareholders for 79 consecutive years. The utility has also increased its payouts for 25 straight years. With a robust annual dividend yield of 3.13%, SO is ranked among the 12 Best S&P 500 Stocks to Buy for Dividends.
7. Xcel Energy Inc. (NASDAQ:XEL)
Number of Hedge Fund Holders: 55
Next on our list of the Best Utility Stocks is Xcel Energy Inc. (NASDAQ:XEL). It is a major US electricity and natural gas company with operations in 8 Western and Midwestern states.
On June 23, Mizuho lowered its price target on Xcel Energy Inc. from $94 to $91, but kept its ‘Outperform’ rating on the shares. The revised target still reflects an upside of almost 12% from the current price level.
According to Mizuho, Xcel “remains a dislocated stock despite continued execution in the regulatory environment”. The utility has resolved its Colorado electric, New Mexico electric, and Minnesota gas rate cases, and even received a verbal order regarding its Minnesota electric rate case from the state’s Public Utilities Commission on June 18.
The analyst firm believes that the “regulatory de-risking”, combined with the end of wildfire season in August, could serve as potential catalysts for a re-rating of XEL.
Xcel Energy Inc. is targeting ongoing earnings of $4.04 to $4.16 per share for FY 2026, indicating a YoY growth of almost 8% at the midpoint. Moreover, the company remains confident to deliver 6% to 8+% long-term earnings growth and expects to deliver 9% EPS growth on average through 2030.
6. Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 55
Duke Energy Corporation (NYSE:DUK) engages in the distribution of natural gas and energy-related services. The company owns and operates a diverse mix of regulated power plants – including hydro, nuclear, solar, battery storage, etc.
On June 24, Morgan Stanley bumped up its price recommendation on Duke Energy Corporation from $132 to $136, while reaffirming an ‘Equal Weight’ rating on the shares. The revision implies an upside potential of 6% from the current share price.
The move comes after the analyst firm adjusted its targets for the North American Regulated & Diversified Utilities / IPPs as part of its monthly sector review. Morgan Stanley highlighted that the utilities sector fell by 5.5% in May, significantly trailing the gains of around 5.1% posted by the overall S&P during the month.
Duke remains on track to achieve its EPS guidance range of $6.55 to $6.80 for full-year 2026. The utility also reiterated its long-term target to deliver an EPS growth rate 5% to 7% through 2030.
5. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Holders: 62
American Electric Power Company, Inc. (NASDAQ:AEP) is one of the nation’s largest electricity producers with approximately 29 GW of diverse generating capacity.
On June 24, Morgan Stanley lifted its price objective on American Electric Power Company, Inc. from $129 to $136 and reiterated its ‘Overweight’ rating on the stock. The target boost still represents a downside of 2% from the current levels.
Morgan Stanley revised its price estimates for the North American Regulated & Diversified Utilities / IPPs as part of its monthly update. The analyst firm noted that the broader utilities sector declined by 5.5% last month, sharply lagging behind the 5.1% gains posted by the overall S&P over the same period.
On the other hand, Ladenburg turned slightly bearish on American Electric Power Company, Inc. on June 18 and trimmed its price target on the stock by $5 (read more details here).
American Electric Power continues to ride the AI boom and signed 7 GW of new large energy project agreements during the first quarter. The utility’s incremental load is expected to grow to 63 GW by 2030, with nearly 90% of it coming from data centers. As a result, it raised its five-year CapEx plan from $72 billion to $78 billion, and also increased its expected long-term operating earnings CAGR to greater than 9%.
4. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 74
With a market cap of over $184 billion as of the writing of this article, NextEra Energy, Inc. (NYSE:NEE) is the most valuable utility company in the world. The company boasts a diverse mix of energy sources, including natural gas, nuclear, renewable energy, and battery storage.
On June 25, Erste Group downgraded NextEra Energy, Inc. from ‘Buy’ to ‘Hold’, without assigning the stock a price target.
The analyst firm cited the sharp YoY increase in NextEra’s long-term liabilities for the downgrade. It is expected that the Federal Reserve’s next monetary policy move will be an interest rate hike, which will further raise financing costs in the medium term. According to Erste Group, this reduces the possibility of positive earnings surprises from the utility.
On the other hand, earlier on Jun 17, Bernstein launched coverage of NextEra Energy, Inc. with an ‘Outperform’ rating and a price objective of $107, indicating an upside of over 21% from the current levels (read more details here).
NextEra Energy, Inc. is targeting adjusted earnings in the range of $3.92 to $4.02 per share for FY 2026, indicating a YoY growth of 7% at the midpoint. The company expects to grow its adjusted EPS at a CAGR of 8% plus through 2032, and is targeting the same from 2032 through 2035, all off the 2025 base of $3.71.
3. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 79
Constellation Energy Corporation (NASDAQ:CEG) is the largest provider of clean, low-carbon energy in the United States. The company also operates the largest fleet of nuclear facilities in the country.
On June 24, Morgan Stanley upped its price target on Constellation Energy Corporation from $359 to $364, while maintaining its ‘Overweight’ rating on the stock. The target boost reflects a significant upside of almost 38% from the current levels.
The analyst firm refreshed its valuation estimates for North American regulated utilities, diversified utilities, and independent power producers (IPPs) in its latest sector update. The firm noted that utility stocks significantly underperformed the broader market in May, with the sector falling by 5.5% while the overall S&P gained roughly 5.1% during the month.
Constellation Energy Corporation also made headlines on June 23 when the company signed a long-term deal with Walmart to provide electricity from its Dresden Clean Energy Center in Illinois, marking the retail behemoth’s first purchase of nuclear energy. While nuclear has been high in demand by data center operators, the agreement with Walmart indicates that other sectors are also now interested in clean energy that is available around the clock.
2. Talen Energy Corporation (NASDAQ:TLN)
Number of Hedge Fund Holders: 85
Talen Energy Corporation (NASDAQ:TLN) is a leading independent power producer and energy infrastructure company that owns and operates nearly 16 GW of power infrastructure in the United States.
On June 23, Jefferies downgraded Talen Energy Corporation from ‘Buy’ to ‘Hold’, but boosted its price objective on the stock from $409 to $453. The revised target reflects an upside of over 12% from the current price level.
According to Jefferies, the downgrade was driven by valuation. TLN soared by over 30% between June 10 and June 22, and the analyst believes that the recent outperformance has left the stock fairly valued. Moreover, the firm also sees a more challenging outlook for securing contracts for existing gas-fired power plants.
Talen Energy Corporation garnered significant investor attention on June 15 when the company announced that it had completed the acquisition of the Lawrenceburg Power Plant in Indiana and the Waterford Energy Center and Darby Generating Station in Ohio from Energy Capital Partners. The strategic move has expanded the utility’s portfolio to nearly 16 GW, of which 35% stems from combined-cycle gas turbine (CCGT) power plants.
Terry Nutt, President of Talen Energy Corporation, commented:
“We are pleased to complete this strategic acquisition. These assets add efficient baseload generation to our portfolio, expand our presence in the western PJM market, and further diversify our fleet. The acquisition is immediately accretive, adding over 15% to our cash flow per share, and strengthens our line of sight to delivering more than $40 per share of annual free cash flow by 2028. We look forward to the contributions the plants and their teams will make as part of Talen.”
1. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 106
Topping our list of the Best Utility Stocks is Vistra Corp. (NYSE:VST), one of the largest competitive power generators in the United States. The company operates a power generation fleet of natural gas, nuclear, coal, solar, and battery energy storage facilities in the country.
On June 24, Morgan Stanley analyst David Arcaro trimmed the firm’s price objective on Vistra Corp. from $212 to $210, but reaffirmed an ‘Overweight’ rating on the shares. The lowered target still implies an upside of more than 28% from the current price level.
In its latest sector review, Morgan Stanley revised its price targets across North American Regulated & Diversified Utilities / IPPs for May. The analyst firm pointed out that the overall utilities sector fell by 5.5% last month, a sharp contrast to the broader market, as the S&P gained approximately 5.1% over the same period.
Meanwhile, Bernstein analyst Sunaina Ocalan initiated coverage of Vistra Corp. on June 18 with an ‘Outperform’ rating and $187 price target. The analyst believes that Vistra’s diverse generation portfolio positions it to capitalize on the soaring power demand, creating a “double-barreled earnings event” (read more details here).
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