Best Utility Stocks in 2025: Top High Yield Dividend Utility Stocks to Buy Now

2025.10.13 2025.10.13
Best Utility Stocks: High Yield Dividend Stocks

Oleg Tkachenkohttps://www.litefinance.org/blog/authors/oleg-tkachenko/

The best utility stocks have shown an annual growth of around 20–70% over the past five years. The average return for the industry stands at 15–30% per annum. The performance of these companies is linked to the continuous demand for electricity, gas, water, and heating from retail consumers. Stability is ensured by government regulation, which is why utility company shares are classified as defensive assets.

This review examines the best utility stocks that have shown the highest returns over the past 5 years. For long-term investors, we have hand-picked high-dividend utility stocks. Alternative options for investing in ETFs are also considered.

Major Takeaways

• Utility companies are organizations primarily operating in the energy sector that supply end consumers with such utilities as electricity, gas, and water. They can represent full-cycle companies, i.e., they may possess their own generating capacities and transportation infrastructure.

• Utility company shares feature moderate volatility, buoyed by government support and constant electricity demand for services, which is why they are used as defensive assets. Energy shares may appeal to long-term investors due to stable and relatively high dividend payments.

• In terms of dividend payments, utility companies rank among the top five, trailing only the chemical, oil and gas, telecommunications, and real estate sectors. Some high-yield utility stocks offer dividend yields of up to 6–8% per annum, making them a good alternative to blue-chip stocks.

• In terms of share price growth, US utility companies are outperforming their European and Asian counterparts. However, European companies are leading in terms of dividend yield by a significant margin.

• The best-performing utility stocks are those of US companies Vistra Corp (VST) and Constellation Energy Corp (CEG).

Top Utility Stocks: Market Performance and Growth Drivers

Utility stocks are shares of companies that supply essential services such as electricity, natural gas, and water to the public. These companies manage and maintain infrastructure such as power grids and pipelines. These include stocks of nuclear power companies, renewable energy companies, etc.

Utility companies operate in the energy sector, but energy companies are not necessarily classified as utility firms.

Key features of utility companies:

• Government regulation. Tariff restrictions for consumers, obligation to provide a continuous supply, etc.

• Moderate volatility. Demand for the end product of utility companies is relatively stable, regardless of the economic situation.

• Investment appeal. Due to moderate volatility and government regulation, utility company shares are considered a defensive asset.

Regulated electric utilities have their advantages. Investments in utility companies can serve as a safeguard against inflation, as they always have demand and government support.

The utility market is expanding due to increased demand from energy-intensive consumers. This primarily refers to consumers in the technology sector, such as data centers created to operate neural networks and AI, cloud servers, etc. Among utility providers, full-cycle companies, including those in nuclear energy, that generate and supply services to consumers without intermediaries, are in the most advantageous position.

Main growth drivers of utility company shares:

• Energy consumption growth. Large data centers, energy demand from artificial intelligence solutions, and other energy-intensive developments increase demand for electricity.

• Government support, programs to modernize power grids and infrastructure, and attracting private investment to the energy sector. Infrastructure modernization is the most capital-intensive part of spending. If part of this expense is subsidized, it will increase the profitability of utility companies, whose upper income threshold is limited by consumer tariff regulations.

• Mergers and acquisitions. For example, Constellation Energy’s $16.4 billion purchase of another giant, Calpine, in January 2025, merged the nuclear and natural gas industries. As a result, Constellation Energy’s shares rose by more than 10%.

• Transition to renewable energy sources. This trend aligns with global environmental goals, which might make it appealing to certain investors.

The value of utility company shares is also influenced by general fundamental factors: macroeconomic statistics, growth in household incomes, domestic economic growth, etc.

Best Utility Stocks to Buy Now: Top Picks for 2025

Stable returns over the past five years are the key requirement for determining the best utility stocks to buy. The list includes companies with the highest returns over this period. While this does not guarantee that the stocks will continue to grow rapidly over the next five years, it is unlikely that they will decline by 30–50%. Notably, remember to conduct technical and fundamental analysis before investing.

The best utility stocks to buy now:

The list includes only shares of US electric power companies. Among European and Asian companies, decent results were shown by Iberdrola (Spain, 19.45% / 50.14%), E.ON (Germany, 14.18% / 55.01%), Terna (Italy, 6.83% / 43.22%), and Tokyo Gas (Japan, 60.26%, 144.16%).

Vistra Corp (VST)

Return over 5 years: +937.36%, return over 1 year: +149.68% (as of 31.08.2025).

This US energy company is engaged in the production and retail sale of electricity. It manages a diversified portfolio of assets that includes gas, coal, nuclear, solar, and battery energy sources. Until 2025, the company had the world’s largest battery-based energy storage system.

The annual dividend yield is 0.47% or $0.88 per share.

Constellation Energy Corp (CEG)

Return over 5 years: +73.24%, return over 1 year: +584.40% (as of 31.08.2025).

The largest producer of carbon-free electricity in the United States. The corporation’s main asset is its nuclear power plants, and it leads in the number of plants in operation. After merging with Calpine in January 2025, Constellation Energy became one of the largest utility companies in the United States. It has nearly 60 GW of generating capacity from zero- and low-emission sources, including nuclear, natural gas, geothermal, hydro, wind, solar, and battery storage.

The annual dividend yield is 0.50% or $1.52 per share.

NRG Energy (NRG)

Return over 5 years: +336.07%, return over 1 year: +82.52% (as of 31.08.2025).

The company produces and sells electricity and natural gas. It owns and operates power plants that run on natural gas, coal, and nuclear energy. It also has a network of power plants that run on solar and wind energy. The company’s customers include millions of private consumers and households in the US and Canada. Its brands and subsidiaries include Reliant, Direct Energy, Green Mountain Energy, Cirro, and Vivint Smart Home. The company is included in the S&P 500 index.

The annual dividend yield is 1.21% or $1.76 per share.

NiSource Inc (NI)

Return over 5 years: +89.72%, return over 1 year: +27.36% (as of 31.08.2025).

NiSource Inc. is one of the largest fully regulated utility companies in the US, serving approximately 3.5 million natural gas customers and 500,000 electricity customers in six states. It owns the Columbia Gas and NIPSCO brands.

The annual dividend yield is 2.65% or $0.88 per share.

Entergy Corp (ETR)

Return over 5 years: +79.96%, return over 1 year: +44.20% (as of 31.08.2025).

Entergy Corp. is an integrated energy company that generates, distributes, and sells electricity to several million customers in the southern United States. Its main energy source is nuclear power plants. Its customers include households, small and medium-sized businesses, and large industrial consumers of the Gulf Coast’s petrochemical, refinery, and LNG sectors. It is involved in the power supply to data centers.

The annual dividend yield is 3.85% or $4.52 per share.

High Dividend Utility Stocks: Income Investment Analysis

Utilities stocks offer one of the highest dividend yields, averaging around 3.29% a year, surpassed only by companies in the real estate, telecommunications, oil and gas, and chemical industries.

Their another advantage is the stability of payouts due to steady demand for electricity, water, etc. As a rule, dividends are paid on a quarterly basis.

European companies made it to the list of the best dividend-paying energy stocks because the dividends of US utility companies are often below 3% per annum.

Engie (ENGIE)

Country: France.

Return over 5 years: +51.55%, return over 1 year: +9.50% (as of 31.08.2025).

The annual dividend yield is 8.39% or €1.48 per share.

Engie is a French gas energy company operating in three segments: renewable energy sources, energy infrastructure management, and energy production. An additional area of activity is the construction and maintenance of energy systems: heating and cooling, mini power plants, and street lighting. The company owns electricity and gas distribution networks in Europe and the US, and also operates seven nuclear reactors at two nuclear power plants in Belgium.

E.ON (EOAN)

Country: Germany.

Return over 5 years: +14.18%, return over 1 year: +55.01% (as of 31.08.2025).

The annual dividend yield is 3.69% or €0.55 per share.

E.ON is Germany’s largest energy company involved in the production and distribution of electricity and is one of the leaders in renewable energy. It owns and operates electricity and gas distribution networks in Germany, Sweden, the Czech Republic, and Poland, and has stakes in companies in Slovakia, Hungary, Croatia, Romania, and Turkey. It supplies natural gas and water to more than 40 million households and is developing infrastructure for electric vehicle charging facilities.

Enel (ENEL)

Country: Italy.

Return over 5 years: +5.82%, return over 1 year: +11.22% (as of 31.08.2025).

The annual dividend yield is 5.99% or €0.48 per share.

Enel is an Italy-based international full-cycle group that owns distribution networks (Enel Grids), generates energy (Enel Green Power), and sells and services energy systems (Enel X Global Retail). The company owns assets in Europe, the United Kingdom, Brazil, and other Latin American countries. The Italian government is the largest shareholder, owning nearly a quarter of the shares.

Snam (SRG)

Country: Italy.

Return over 5 years: +20.00%, return over 1 year: +13.47% (as of 31.08.2025).

The annual dividend yield is 5.62% or €0.28 per share

Snam is an operator of Italy’s gas transmission system. It focuses on several areas:

• natural gas transportation – about 58% of revenue;

• gas storage services in gas storage facilities – about 14% of revenue;

• construction and management of biogas production facilities – about 27% of revenue.

The company operates mainly in Europe.

Naturgy Energy Group (NTGY)

Country: Spain.

Return over 5 years: +61.34%, return over 1 year: +15.69% (as of 31.08.2025).

The annual dividend yield is 6.41% or €0.28 per share.

Naturgy Energy Group is a Spanish full-cycle energy group focused on gas resale and electricity generation, pipeline and distribution network management, and natural gas sales to end-users in Spain and Latin America. The key assets are:

• Gas distribution and electricity networks in Spain, Brazil, Chile, Argentina, and Mexico.

• Wind, solar, and hydroelectric power plants in Europe and Latin America; gas storage facilities.

Undervalued Utility Stocks with Growth Potential

Undervalued utility stocks can be identified using multipliers. If their values do not match the industry average or are far from the threshold, the stocks can be considered undervalued. However, there is no guarantee that they will skyrocket right away — the asset may trade at minimum levels for months or grow in price much more slowly than expected. Multiplier values can be found on analytical portal websites. For example, Finviz provides data for US companies.

Edison International

Country: United States.

Return over 5 years: +7.54%, return over 1 year: -36.75% (as of 31.08.2025).

The annual dividend yield is 6.08% or $3.31 per share.

In January and February 2025, Edison International had to cut off electricity to more than 320,000 consumers due to forest fires. There were also concerns that the company’s equipment could have triggered such a large-scale disaster. On February 3, S&P Global Ratings revised its outlook on EIX’s rating from stable to negative.

National Grid (NG)

Country: United Kingdom.

Return over 5 years: +31.57%, return over 1 year: -0.24% (as of 31.08.2025).

In 2024, the NG stock faced high volatility due to two factors. Firstly, the company decided to switch to clean energy production within five years. Whether this is justified is a big question. Secondly, the UK has experienced a shortage in energy transportation and storage. Increased demand from electrification led to grid congestion, which caused energy prices to fluctuate.

How to Invest in Utility Stocks: Individual Stocks or ETFs

Exchange-traded funds (ETFs) are ready-made portfolios of assets. Rather than selecting and monitoring stocks yourself, you can buy a fund’s securities and let professional managers do the work for you.

Below are some examples of how to invest in utility stocks through ETFs:

1. Vanguard Utilities ETF (VPU). It invests 60% in energy companies and 4.5% in gas companies. NextEra Energy has the largest share, just over 10%. The other companies have shares of less than 8%. The return over the last year is 12.4%.

2. iShares U.S. Utilities ETF (IDU). A diversified fund with an annual return of 12.48%. The main asset is NextEra Energy.

ETFs offer lower returns than individual utility stocks. However, there is no need to manage the portfolio yourself, so long-term investors usually choose ETFs.

Conclusion

Utility stocks represent a valuable tool for diversifying an investment portfolio. Almost all leaders in their respective regions and segments, such as nuclear power and vertically integrated energy companies, have demonstrated decent growth over the past five years, despite rising inflation and related risks.

Advantages of utility company shares:

• Growing demand for electricity due to the development of energy-intensive technologies – AI, blockchain, cloud services.

• Government orders and support. Development of nuclear and alternative energy as a replacement for oil and coal.

Disadvantages and risks of utility company shares:

• Dependence on government tariff policy. Restrictions limit profit growth potential.

• High share of capital expenditures. Companies must maintain and modernize communication networks, which can lead to an increase in debt.

• Risk of non-payment by consumers during recessions.

Despite the potential risks, it is recommended to allocate approximately 5-10% of the investment portfolio to utility company shares.