In this article, we will discuss the 10 Most Profitable Utility Stocks to Buy Now.
Utility companies supply basic utilities like water, gas, and electricity. The demand for these stocks’ services is often steady, even during recessions, which makes them defensive investments.
Morningstar energy and utilities strategists Travis Miller and Andrew Bischof see reasons to invest in utility companies, stating that while the 2024 surge paused in October as interest rates began to rise, utility stocks are still holding on to their stellar performance from the previous year. Most US utilities are trading near the estimates of their fair values as of mid-February.
Utility firms generally generate substantial dividends and appear to be expensive at present. Miller & Bischof stated:
“Utilities continue to grow their dividends at an impressive rate. Nearly all utilities have already announced dividend increases for 2025 or are on track to announce increases in the first quarter. We expect 5% median sectorwide dividend growth in 2025.”
According to JP Morgan’s report in 2024, utility stocks have become unanticipated market leaders, outperforming only the technology sector and yielding a total return of over 17%. The adoption of AI, the growth of data centers, the proliferation of EVs, and the outsourcing of manufacturing are the main drivers of this rally, which is aided by a rapid shift in the demand for electricity. Data centers alone already account for 4.5% of U.S. electricity usage, which is expected to rise to almost 8% by 2030 after two decades of stagnant demand. Given the growing number of extreme weather events, the U.S. electric grid, which is largely over a century old, is unprepared to handle this surge and will require significant investments in capacity, stability, and resilience. Businesses engaged in storage, grid upgrading, and generation stand to gain from this shift. The industry is trading at 18.7x projected earnings, which is 13% less than the broader market, showing that it will continue to be valuable even after the recovery. Utility dividend yields may become more attractive if interest rates decline, which could lead to more growth. Utilities present a strong alternative for investors looking to gain exposure to the expansion of AI-related infrastructure without following tech prices, supported by real demand and structural investment requirements.
The broader market’s utilities sector has performed well over a range of historical periods. The year-to-date return is 3.61%. In the last year, the sector’s return was strong at 17.65%. When considering longer periods, the annualized return is 1.86% for the first three years and 6.13% for the fifth. At 5.68%, the 10-year annualized profit is a little lower. The utilities sector exhibits steady growth in comparison to the overall market, with large short-term gains but a more moderate long-term return, showing its defensive nature and steadiness during volatile times. The resilience of the 5-year performance is noteworthy.
Utility stocks may be more secure than other sectors, but they are nevertheless vulnerable to a halt in expenditure on thirsty data centers. Long seen as market safe havens, utility equities are suddenly uncertain as artificial intelligence changes the demand for electricity. According to Scotiabank’s Andrew Weisel, “electricity is a very basic need for most individuals and most companies,” underscoring the industry’s longstanding resiliency. However, as U.S. consumption dominates the world and is expected to exceed 1,000 TWh annually by 2030, as per the IEA, this stability is becoming increasingly connected to AI-driven data centers. Earnings risks are increased by a slowdown in AI capital expenditures, such as a giant tech company owned by Bill Gates reducing some of its programs. Weisel cautioned that “investors will be skeptical,” while Nikki Hsu of Bloomberg Intelligence pointed out that “requests for rate hikes would be rejected by regulators” during a recession.
With that said, here are the 10 Most Profitable Utility Stocks to Buy Now.
Our Methodology
For this list, we screened for utility companies with a net profit margin over 10%, which suggests sound financial health and excellent cost management. The stocks are ranked in ascending order of their net profit margin as of the most recent quarter.
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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Consolidated Water Co. Ltd. (NASDAQ:CWCO)
Net Profit Margin: 13.78%
Consolidated Water Co. Ltd. (NASDAQ:CWCO) operates as a water utility company. It develops and oversees water distribution networks and seawater desalination facilities. The company’s retail segment manages the water utility for the Seven Mile Beach and West Bay areas of Grand Cayman Island. Long-term contracts are in place for the bulk segment to provide Grand Cayman and the Bahamas government utilities with drinkable water. Water infrastructure is designed, built, and sold by the services segment, which also offers management and operational services to other parties. The manufacturing segment produces and services a diverse range of custom and customized water-related products used in commercial, municipal, and industrial water production, supply, and treatment, as well as the corporate segment. It is ranked on our list of the Best Utility Stocks since its net profit margin has surged by 13.78%.
Consolidated Water Co. Ltd. (NASDAQ:CWCO) declared on February 24 that Cayman Water Company, a subsidiary, has obtained a new concession from the Cayman Islands government, enabling it to continue providing Grand Cayman with its only source of drinking water. To fulfill the increasing demand, the company runs three desalination facilities, producing roughly 4 million gallons of water every day. Moreover, the firm is growing its manufacturing facility and West Bay factory to boost profitability and support future expansion. The seawater desalination project in Hawaii is progressing and is anticipated to have a major effect on earnings and revenue in 2026 and 2027.
During 2024, cash equivalents climbed by $57 million to $99.4 million, with shareholders’ equity standing at $210 million and the balance sheet showing almost no debt.
9. Atmos Energy Corporation (NYSE:ATO)
Net Profit Margin: 19.27%
Atmos Energy Corporation (NYSE:ATO) is ranked ninth on our list of the Best Utility Stocks as its net profit margin has grown by 19.27%. The Texas-based natural gas distribution firm makes significant investments in safety initiatives and infrastructure improvements to deliver dependable and safe natural gas services. The firm recorded $1.1 billion in revenue for the first quarter of 2025, a 1.5% growth over the same period the previous year. Its net income increased from $311 million to $352 million over the previous year.
Strong cash results were also reported for Atmos Energy Corporation (NYSE:ATO). The company’s cash and cash equivalents at the end of the quarter were $584.5 million, up from $307.3 million during the same period last year. Furthermore, its operating cash flow rose from $245.3 million in the same quarter of the previous year to $282 million. The company has increased its dividends for 41 years in a row as a result of its cash position.
Morgan Stanley increased its price target on Atmos Energy Corporation (NYSE:ATO) from $147 to $160. Investors are informed by the analyst that the company is revising its price targets for Regulated & Diversified Utilities / IPPs in North America. According to the company, utilities beat the S&P in March. As stated by Morgan Stanley, the main emphasis areas going into Q1 will probably be tariff risk because it is a “quiet quarter” with no significant financial announcements.
8. American Water Works Company, Inc. (NYSE:AWK)
Net Profit Margin: 22.44%
American Water Works Company, Inc. (NYSE:AWK), which serves almost 3.5 million customers across 16 states, is the biggest investor-owned water and wastewater utility in the United States. The firm mostly works in regulated markets and offers water and wastewater services to residential, commercial, and industrial clients. Water services for military sites, which are provided under long-term contracts with regulated-like returns, are the company’s unregulated business. The stock surged by more than 16% YTD, and its net profit margin growth is 22.44%, making it among the Best Utility Stocks.
American Water Works Company, Inc. (NYSE:AWK)’s earnings growth has consistently outpaced that of most regulated electric utilities, despite the fact that core retail water demand has constantly declined due to efficiency savings.
The business effectively carried out its plan in 2024, investing over $3 billion in infrastructure, and produced 2024 earnings of $5.39 per share, indicating an 8% YoY growth. The business added around 70,000 new client connections, hitting its acquisition goal. As of early 2025, it had over 24,000 customer connections under contract. American Water Works Company, Inc. (NYSE:AWK) maintained its earnings guidance for 2025 at $5.65 to $5.75 per share, which is an 8% YoY increase above weather-normalized 2024 EPS.
Angie Storozynski, a Seaport Research analyst, maintained a Buy recommendation on its shares and increased the price objective from $140 to $156. According to the analyst, American Water Works Company, Inc. (NYSE:AWK) continues to have a good outlook on the water utilities industry and is attracted to American Water because of its defensive qualities.
7. NextEra Energy, Inc. (NYSE:NEE)
Net Profit Margin: 23.02%
NextEra Energy, Inc. (NYSE:NEE) runs a regulated electric utility in Florida. Moreover, it owns and runs electricity transmission lines, renewable energy projects, and natural gas pipelines that produce steady revenue supported by long-term, fixed-rate contracts. These companies provide the firm with consistent cash flow so that it can spend on growing its utility business and pay its dividend. The net profit margin has also jumped by 23.02%, making it one of the Best Utility Stocks.
NextEra Energy, Inc. (NYSE:NEE) is spending billions of dollars to grow its sustainable energy and utilities businesses. A significant long-term growth engine should be the utility’s Real Zero goal, which seeks to eliminate carbon emissions from its activities by 2045. In Q1 of 2025, the firm’s expansion of around 8.1% in regulatory capital used drove the $0.07 year-over-year increase in its subsidiary FPL’s earnings per share and the nearly 9% year-over-year increase in adjusted earnings per share. NextEra Energy, Inc. (NYSE:NEE)’s Energy Resources created about 3.2 gigawatts of new renewables and storage projects, and FPL put 894 megawatts of new solar into service, showing a high demand for and growth in renewable energy.
NextEra Energy, Inc. (NYSE:NEE)’s robust financial profile, which provides it with the flexibility to finance its initiatives, is another element contributing to its above-average growth. Its profile includes a dividend payout ratio that has generally been below the sector average and one of the strongest credit ratings among large rate-regulated electric utility businesses.
6. Middlesex Water Company (NASDAQ:MSEX)
Net Profit Margin: 23.11%
Middlesex Water Company (NASDAQ:MSEX) owns and operates regulated water utility and wastewater systems across the United States. The company works in Delaware, Pennsylvania, and New Jersey, which are in the east. The business is divided into two operating segments: non-regulated and regulated. Water collection and distribution to residential, commercial, industrial, and fire safety customers are all part of the regulated industry. Contract services for running private water and wastewater systems are part of the unregulated industry. The Regulated division and residential customers account for the majority of the company’s revenue.
Middlesex Water Company (NASDAQ:MSEX)’s revenues for 2024 were $191.9 million, up $25.6 million from 2023’s $166.3 million. The New Jersey Board of Public Utilities’ approved base rate increase in March 2024 and higher weather-driven customer demand were the main causes of the $19.9 million increase in Middlesex System revenues. Tidewater Utilities, Inc. had a $4.5 million increase in revenue in its Delaware System, mostly as a result of growing customer demand and weather-related customer growth. Higher supplemental contract services resulted in a $0.7 million increase in non-regulated revenues. In 2024, the firm reported a net income of $44.4 million, which was $12.8 million more than in 2023.
The cost of operations and maintenance in 2024 was $92.4 million, up $9.3 million from $83.1 million in 2023. The main causes of this increase were higher labor costs from yearly wage increases, higher energy costs from rising water demand, and higher legal, financial, and regulatory costs. Its net profit margin soared by 23.11%, ranking it sixth on our list of the Best Utility Stocks.
5. Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR)
Net Profit Margin: 25.83%
Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) is responsible for the generation, transmission, and marketing of electricity in Brazil. The business runs a variety of nuclear, thermal, hydro, and wind generating facilities across the country. Administration activities primarily represent the company’s cash management, the management of the mandatory loan, the management of business in SPEs, and other activities. Its segments include Generation, which involves the generation of electric energy, the sale of energy to distribution companies and free consumers, and commercialization. The stock went up by more than 11% YTD, and the net profit margin increased by 25.83%, making it one of the Best Utility Stocks.
Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) has embarked on a new phase of development after its privatization was approved, emphasizing customer trust, disciplined management, and great performance. The firm achieved a 50% reduction in mandatory loan provisions, from BRL26 billion to BRL13.6 billion, showing significant progress in financial management. A record BRL4 billion dividend payout was announced, pointing to better financial outcomes. A unified structure and improved risk management let it reach 700 free energy clients, thus growing its customer base.
The business has made significant investments in energy infrastructure, including BRL14 billion for new projects, including Transnorte Energia and the Coxilha Negra wind farm. As part of its restructuring efforts, Eletrobras hired 2,100 new workers and cut operational expenses to BRL6.784 billion.
4. Sempra (NYSE:SRE)
Net Profit Margin: 26.55%
Sempra (NYSE:SRE) serves one of the most extensive utility customer bases in the United States. It owns 80% of Oncor, a transmission and distribution company in Texas, and distributes electricity and natural gas throughout Southern California. Over 20 million consumers are served by SoCalGas and San Diego Gas & Electric, while over 10 million customers in Texas are served by Oncor. Sempra Infrastructure Partners, of which the firm maintains a majority stake, owns and runs infrastructure in Mexico as well as liquefied natural gas plants in North America.
For 2024, Sempra (NYSE:SRE) reported adjusted EPS of $4.65, which was marginally below the middle of their guidance range. The business has issued a 2026 EPS projection of $4.80-$5.30, which represents about 12% growth from the 2025 midpoint, and amended its 2025 EPS guidance to $4.30-$4.70. Notably, SRE is increasing its long-term EPS growth rate projection to 7-9% because of the impressive growth in earnings that Sempra Texas is anticipated to generate. Opportunities at Oncor account for more than half of the company’s new record capital plan of $56 billion for 2025–2029, which represents a 16% increase over the previous plan. The positive projection, combined with double-digit average analyst upside, leads us to add the company to our list of the Best utility stocks.
Sempra (NYSE:SRE)’s price target was increased by Morgan Stanley from $85 to $86. The analyst informs investors that the company is revising its price expectations for North American Regulated and Diversified Utilities/IPPs. According to the company, utilities beat the S&P’s 1.40% decline in February. Regulatory instability in power markets, renewables defense with safe harboring, equipment onshoring, rising return levels, and new generation development problems are among the key takeaways from the company’s annual Energy & Power Conference, according to the firm.
3. The York Water Company (NASDAQ:YORW)
Net Profit Margin: 27.11%
The York Water Company (NASDAQ:YORW) is a public utility company based in the United States. One significant advantage of utility companies is the consistency of their operating cash flow. Its administration can predict cash flow and expenses well in advance because the demand for water and wastewater services is largely constant from year to year. The business is able to seek strategic acquisitions that improve its long-term cash flow and profitability because of this financial certainty. Its net profit margin rose 27.11%. Hence, it is one of the Best Utility Stocks.
The York Water Company (NASDAQ:YORW) reported $18.8 million in revenue for the fourth quarter of 2024, a 4.2% jump over the same period the previous year. The company’s net income for the period, however, decreased to $5.1 million from $6 million YoY. The company has stated that, excluding acquisitions, it will invest around $46 million in 2025 and $48.5 million in 2026 to fund major extensions. The business spent $48.2 million on construction projects over the year, which included constructing a wastewater treatment plant, repairing and strengthening the spillway at the Lake Williams dam, and performing regular maintenance and infrastructure upgrades. It also spent a total of $783,000 to buy two wastewater systems and four water systems.
The York Water Company (NASDAQ:YORW) steady dividend history is another element that contributes to its appeal as an investment. The publicly traded company has consistently paid dividends every year since its founding in 1816. Furthermore, for 28 years in a row, the business has increased its quarterly dividend.
2. Essential Utilities, Inc. (NYSE:WTRG)
Net Profit Margin: 28.54%
One of the few pure-play water utilities in the US for over 50 years was Essential Utilities, Inc. (NYSE:WTRG), previously Aqua America. However, in March 2020, it diversified its earnings mix and increased its size by about 50% with the $4.3 billion acquisition of Peoples Natural Gas.
The firm increased its 2024 GAAP earnings per share from $1.86 to $2.17. The non-GAAP earnings per share were $1.97, which was consistent with the $1.96 to $2.00 projection. Additionally, Essential Utilities, Inc. (NYSE:WTRG) won rate cases for natural gas and water in Pennsylvania, which account for 75% of operations. Weather normalization was implemented, and both stockholders and customers benefited from the January 2025 changes.
The company has spent more than $1.3 billion in 2024 alone, out of a total of over $5.4 billion since 2020, for infrastructure improvements in nine states. These initiatives include improving water pressure systems, replacing outdated pipelines, eliminating lead service lines, and modernizing treatment facilities. Essential Utilities, Inc. (NYSE:WTRG) intends to invest $1.4 billion in 2025, with a total of $7.8 billion by 2029. Its net profit margin grew by 28.54%, making it on our list of the Best Utility Stocks.
The firm was raised from Hold to Buy by Jefferies on January 28. Essential Utilities, Inc. (NYSE:WTRG)’s price objective was set at $41. The stock was upgraded due to anticipated water purchases, particularly in Pennsylvania, and significant compliance-related spending. Jefferies projected a 20% total shareholder return and 6.4% annual growth through 2029, maintaining its 2024 and 2025 EPS estimates at $1.98 and $2.15.
1. Pampa Energía S.A. (NYSE:PAM)
Net Profit Margin: 33.00%
Pampa Energía S.A. (NYSE:PAM) and its subsidiaries operate in the energy sector, primarily producing oil and gas and generating electricity. The company operates in the following business segments: Transportation, Holding, Petrochemicals, Oil and Gas, and Generation. The oil and gas segment generates the majority of the revenue for the business.
Pampa Energía S.A. (NYSE:PAM)’s outstanding gas production in 2024 was fueled by solid well performance in Vaca Muerta, with average output increasing 21% year over year and representing an 80% rise since 2017. Wind energy has grown by about 50% since 2017 and is expected to reach a 95% availability rate in 2024 due to the commissioning of the PEPE 6 Wind Farm, which added 140 megawatts of clean energy capacity. EBITDA climbed 19% year on year and 29% over 2017, owing mostly to the electricity and gas businesses, assisting in the reduction of net debt to $410 million. While power units reported a 94% availability rate with improved PPA performance, gas production increased 11% year over year in Q4. The company also successfully controlled its debt, issuing a $360 million international bond maturing in 2034 and achieving its lowest net debt level since 2016, with a net leverage ratio of 0.6. Furthermore, rising activity in Sierra Chata and El Mangrullo helped to support a 16% rise in total proven reserves to 231 million barrels of oil equivalent. The company’s net profit margin surged by 33.00%, making it the Best Utility Stock.
Pampa Energía S.A. (NYSE:PAM)’s price target was increased by JPMorgan from $59 to $93.50. Despite the recovery, JPMorgan remains optimistic about Argentina’s oil and gas industry and believes there is still room for growth in the area. The analyst informs investors in a research note that the sector has changed under the new government due to major reforms, such as oil deregulation, incentives, and fuel prices that are in line with international parity. It believes that it is not too late to invest in the group.
Overall, PAM ranks first among the 10 Most Profitable Utility Stocks to Buy Now. While we acknowledge the potential of Utility companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PAM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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