In this article, we will discuss: 8 Most Profitable Utility Stocks to Buy Right Now.
Utility stocks are publicly traded firms that supply electricity, natural gas, and water to customers.
According to Deloitte’s 2026 Power and Utilities Industry Outlook, US electricity demand went up in 2025, mainly due to industrial electrification, AI workloads, and transportation. The peak demand is expected to grow by 26% by 2035. By 2030, industrial electrification might add 25 GW, and data center usage could reach 176 GW, a fivefold rise from 2024. Although 93% of new capacity through July 2025 will be renewable, supply expansion is slow, with 2 terawatts trapped in interconnection lines. Reliability constraints continue to grow, with 15 natural disasters in H1 2025 causing more than $1 billion in damages, three of the events surpassing $5 billion, and residential retail prices predicted to rise 4.5% from 2024. The 2025 reconciliation bill raised compliance standards and decreased incentives for green energy.
Utilities are putting firm capacity first. By 2030, 209 GW of new capacity will counter 104 GW of coal and gas retirements, or just 10% of firm baseload. Near-term efforts include ~19 GW gas additions, coal and nuclear life extensions, and peaker use. Long-term storage regulations surpass 2.75 GW. Capital requirements exceed $1.4 trillion, forcing $109 billion in 2025 M&A and increased use of securitization, partnerships, tax-credit monetization, and service-based agreements to preserve cost.
With that said, here are the 8 Most Profitable Utility Stocks to Buy Right Now.
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Methodology:
We first sifted through the ETFs and stock screener to compile a list of the top Utility stocks. We then used Yahoo Finance to pick profitable stocks that had high TTM net income (over $1 billion) and a high TTM net income margin (over 15%). From that list, we selected 8 stocks that were the most popular among elite hedge funds. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2025.
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).
8. Ameren Corporation (NYSE:AEE)
TTM Net Income as of December 30: $1.41 billion
TTM Net Income Margin as of December 30: 16.34%
Number of Hedge Fund Holders: 34
Ameren Corporation (NYSE:AEE) is among the Most Profitable Stocks.
TheFly reported on December 17, 2025, that UBS kept its buy recommendation on Ameren Corporation (NYSE:AEE) shares while reducing its price objective to $115 from $121.
Separately, Morgan Stanley maintained an Equal Weight rating on Ameren Corporation (NYSE:AEE) and lowered its price target from $108 to $103. The firm pointed out in a year-ahead note that data centers will be a major driver of utility performance with possible growth upside in 2026.
Based on a 2025 estimate midpoint of $4.95, Ameren Corporation (NYSE:AEE) revised its long-term EPS growth guidance to a 6% to 8% compound annual rate from 2025 through 2029. The revised 2025 estimate is between $4.90 and $5.10 per share, and the projected 2026 EPS is between $5.25 and $5.45.
Ameren Corporation (NYSE:AEE) is a regulated utility that operates in Illinois and Missouri. Morningstar experts claim that Missouri’s improved regulations have produced substantial investment opportunities. Illinois has been challenging, yet management has proven capable of overcoming regulatory difficulties.
The stock is up by 12.21% YTD as of December 31, 2025.
7. Dominion Energy, Inc. (NYSE:D)
TTM Net Income as of December 30: $2.61 billion
TTM Net Income Margin as of December 30: 16.79%
Number of Hedge Fund Holders: 35
Dominion Energy, Inc. (NYSE:D) is among the Most Profitable Stocks.
TheFly reported on December 22, 2025, Dominion Energy, Inc. (NYSE:D) made a statement in response to a Director’s Order from the United States Department of the Interior ordering a 90-day halt of development on the Coastal Virginia Offshore Wind Project. The company stated that the project is critical to American national security and fulfilling Virginia’s rapidly increasing energy demand, which it defined as the fastest rising in the country. According to the company, this requirement is fueled by the need to provide dependable electricity to the world’s largest warship maker, the highest concentration of data centers worldwide, and infrastructure that supports the advancement of artificial intelligence.
The firm cautioned that stopping the project could risk thousands of jobs, lead to energy inflation, and threaten the reliability of the grid for military, AI, and civilian systems. After Virginia state regulators reviewed the project in 2022, Dominion Energy, Inc. (NYSE:D) stated that it is American-owned and that customers are paying for it. The company also stated that its cyber and physical security systems are overseen by state and federal officials. The company reported that the project is situated 27 to 44 miles offshore, involves a close military partnership, and has been in development for more than ten years. There have been no documented effects on national security during the five years that two pilot turbines have been in operation.
Dominion Energy, Inc. (NYSE:D) is an integrated energy firm.
6. Sempra (NYSE:SRE)
TTM Net Income as of December 30: $2.11 billion
TTM Net Income Margin as of December 30: 15.75%
Number of Hedge Fund Holders: 41
Sempra (NYSE:SRE) is among the Most Profitable Stocks.
TheFly reported on December 20, 2025, that Sempra (NYSE:SRE) reported in a regulatory filing that San Diego Gas & Electric is exploring regulatory remedies in response to a Track 2 recommended decision. In the fourth quarter of 2025, SDG&E projects that the proposed action would result in an after-tax charge to Sempra (NYSE:SRE) and SDG&E’s earnings of $471 million. The sum includes $34 million for the first three quarters of 2025 and $437 million for the period 2019-2024. As per the firm, a number of factors, including the timing and outcome of the final decision anticipated in 2026, might cause actual results to differ significantly.
Separately, on December 17, 2025, UBS kept its Neutral rating on Sempra (NYSE:SRE) shares while reducing its price objective from $98 to $96.
On December 16, 2025, Morgan Stanley lowered its price objective for Sempra (NYSE:SRE) from $98 to $91 while keeping its Overweight rating, based on another analyst update. The business anticipated that data centers will boost utility share performance and growth in 2026.
Sempra (NYSE:SRE) serves as one of the most significant utility customer bases in the United States.
5. American Water Works Company, Inc. (NYSE:AWK)
TTM Net Income as of December 30: $1.11 billion
TTM Net Income Margin as of December 30: 21.93%
Number of Hedge Fund Holders: 53
American Water Works Company, Inc. (NYSE:AWK) is among the Most Profitable Stocks.
TheFly reported on December 18, 2025, that New Jersey American Water, a subsidiary of American Water, has agreed to purchase the Hopewell Borough water system for $6.4 million. The sale was approved by 58% of Hopewell voters in a referendum held in November 2025. Over 880 customer connections are served by the Hopewell system. According to the business, a bulk water agreement has allowed them to supply a sizable amount of Hopewell’s water for many years, facilitating a smooth transition. The business stated that it intends to make investments in the system to repair outdated infrastructure, eliminate lead service lines, improve dependability, and maintain reasonable prices. New Jersey American Water’s president, Mark McDonough, stated that the firm is dedicated to providing Hopewell residents with top-notch service after the acquisition.
Separately, on December 17, 2025, Barclays analyst Nicholas Campanella kept the shares’ Underweight rating. It also reduced the price target for American Water Works Company, Inc. (NYSE:AWK) from $134 to $122. The modification was included in Barclays’ utilities sector projection for 2026. Barclays maintained a strong outlook for the industry, describing 2026 as a year of execution and defense in the wake of increased spending commitments and guidance that indicated positive adjustments to earnings would follow.
American Water Works Company, Inc. (NYSE:AWK) is the largest investor-owned US water and wastewater company, serving approximately 4 million customers across 14 states.
4. American Electric Power Company, Inc. (NASDAQ:AEP)
TTM Net Income as of December 30: $3.66 billion
TTM Net Income Margin as of December 30: 17.23%
Number of Hedge Fund Holders: 56
American Electric Power Company, Inc. (NASDAQ:AEP) is among the Most Profitable Stocks.
As reported by TheFly, Siebert Williams started covering American Electric Power Company, Inc. (NASDAQ:AEP) on December 18, 2025, with a $137 price target and a buy rating. As per analyst Christopher Ellinghaus, a compound annual EPS growth rate of 8.8% through 2030 is anticipated, with a retail power load increase of almost 9% and rate base growth of nearly 10% driving earnings growth over the next five years.
UBS kept its Sell rating on American Electric Power Company, Inc. (NASDAQ:AEP) shares while reducing its price objective from $114 to $107.
Morgan Stanley also reduced its price objective on American Electric Power Company, Inc. (NASDAQ:AEP) to $120 from $128 and maintained its Overweight rating. In its year-ahead statement, the firm stated that data centers and growth upside will be major drivers of utility performance in 2026.
American Electric Power Company, Inc. (NASDAQ:AEP) operates several utilities, providing investors with insurance against a single adverse regulatory verdict. Regulated investments form the largest portion of the company’s capital investment strategy. Morningstar analysts believe that management’s 7% to 9% earnings growth plan from 2026 to 2030 is attainable at the upper end, and this investment supports that goal.
The stock is up by 25.42% YTD as of December 31, 2025.
3. The Southern Company (NYSE:SO)
TTM Net Income as of December 30: $4.46 billion
TTM Net Income Margin as of December 30: 15.42%
Number of Hedge Fund Holders: 58
The Southern Company (NYSE:SO) is among the Most Profitable Stocks.
TheFly reported on December 16, 2025, that as part of its 2026 outlook for the utilities group, Morgan Stanley downgraded The Southern Company (NYSE:SO) from Equal Weight to Underweight and reduced its price objective to $81 from $97. According to the firm’s research report, utility share performance is forecast to be driven by data centers and growth upside in 2026, with no slowdown in activity or alleviation of grid tightness. The rating adjustment and lowered valuation forecast were caused in part by Morgan Stanley’s advice to investors to steer clear of political and regulatory risk, especially during an election year.
On December 15, 2025, UBS reduced its price target for The Southern Company (NYSE:SO) from $98 to $94 and maintained a neutral rating on the stock.
On December 15, 2025, JPMorgan reaffirmed its neutral rating and lowered its price objective on The Southern Company (NYSE:SO) from $104 to $93. As stated by JPMorgan, the modification came when the company’s model was updated.
The stock is up by 6.25% YTD as of December 31, 2025.
The Southern Company (NYSE:SO) is one of the largest utilities in the United States.
2. Duke Energy Corporation (NYSE:DUK)
TTM Net Income as of December 30: $4.92 billion
TTM Net Income Margin as of December 30: 15.97%
Number of Hedge Fund Holders: 62
Duke Energy Corporation (NYSE:DUK) is among the Most Profitable Stocks.
According to TheFly, UBS reduced its price objective for Duke Energy from $135 to $126 and retained a Neutral rating on December 17, 2025.
Separately, on December 16, 2025, Morgan Stanley maintained its Equal Weight rating. The firm lowered its price objective for Duke Energy Corporation (NYSE:DUK) from $133 to $126. The company predicted that data center demand would have a substantial effect on utility performance in a year-ahead note. Morgan Stanley also cited potential growth upside in 2026 as a key element in defining its outlook, even as it revised its value estimates.
In a separate business news release, Duke Energy Corporation (NYSE:DUK) stated that on December 30, 2025, it applied for an early site permit from the U.S. Nuclear Regulatory Commission at a location close to the Belews Creek Steam Station in Stokes County, North Carolina. As part of the company’s strategy and continuous attempt to assess new nuclear power possibilities, the submission brings an end to two years of preparatory work. According to the business, this project intends to lower costs and risks related to future power generation while simultaneously reliably providing its customers’ growing energy needs.
Duke Energy Corporation (NYSE:DUK) is one of the largest utilities in the United States, having regulated utilities in the Carolinas, Indiana, Florida, Ohio, and Kentucky.
1. NextEra Energy, Inc. (NYSE:NEE)
TTM Net Income as of December 30: $7.21 billion
TTM Net Income Margin as of December 30: 20.81%
Number of Hedge Fund Holders: 72
NextEra Energy, Inc. (NYSE:NEE) is among the Most Profitable Stocks.
Jefferies boosted NextEra Energy, Inc. (NYSE:NEE)’s price target to $88 from $85 while keeping a Hold rating, as reported by TheFly on December 31, 2025. The update followed a thorough analysis of the business’s prospects after its analyst day, when Jefferies updated its earnings projections. The firm now expects profits per share to grow at a compound annual growth rate of approximately 9% through 2032. The analyst claims that this estimate surpasses both the 7.6% consensus forecast for the 2025-2032 timeframe and the company’s guidance of more than 8% EPS growth.
Separately, on December 17, 2025, UBS reduced its price objective for NextEra Energy, Inc. (NYSE:NEE) from $94 to $91 and maintained a Buy rating.
In a different analyst report on December 16, 2025, Morgan Stanley maintained its Overweight rating on NextEra Energy, Inc. (NYSE:NEE). The firm lowered its price goal to $95 from $97. The firm stated in a year-ahead note that demand related to data centers is anticipated to have a significant impact on the utility market performance. Morgan Stanley also cited growth upside possibilities in 2026 as a key reason for its sustained Overweight rating on the business despite a minor drop in the firm’s price target.
NextEra Energy, Inc. (NYSE:NEE)’s regulated utility, Florida Power & Light, is Florida’s largest rate-controlled utility.
While we acknowledge the potential of NEE to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NEE and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. 8 Most Profitable Utility Stocks to Buy Right Now is originally published on Insider Monkey. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
