The Best Utilities Stocks to Buy

Utilities stocks appeal to investors for a few different reasons.

• They are considered defensive investments, as demand for electricity, water, and gas remains stable regardless of economic conditions.
• Many offer attractive yields and therefore appeal to investors who like high-dividend stocks.
• Utilities companies often operate in regulated industries, providing consistent revenue and earnings, which can reduce volatility in a portfolio.

In the year to date, the Morningstar US Utilities Index rose 5.90%, while the Morningstar US Market Index gained 9.82%.

The 6 Best Utilities Stocks to Buy Now

These were the most undervalued utilities stocks that Morningstar’s analysts cover as of May 14, 2026.

1. Portland General Electric POR
2. Edison International EIX
3. National Grid NGG
4. American Electric Power Company AEP
5. DTE Energy DTE
6. FirstEnergy FE

To come up with our list of the best utilities stocks to buy now, we screened for:

• Utilities stocks that are undervalued, as measured by our price/fair value metric.
• Stocks that earn narrow or wide

  Morningstar Economic Moat Ratings

  . We think companies with narrow economic moat ratings can fight off competitors for at least 10 years; wide-moat companies should remain competitive for 20 years or more.

• Stocks that earn a Low, Medium, High, or Very High

  Morningstar Uncertainty Rating

  , which captures the range of potential outcomes for a company’s fair value.

Here’s a little more about each of the best utilities stocks to buy, including commentary from the Morningstar analysts who cover each company. All data is as of May 14, 2026.

Portland General Electric

• Morningstar Price/Fair Value: 0.86
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.41%
• Industry: Utilities—Regulated Electric

Regulated electric company Portland General Electric is the most affordable stock on our list of the best utilities companies to invest in. Portland General Electric is a regulated electric utility providing generation, transmission, and distribution services in a service territory that includes about half of all Oregon residents and two-thirds of the state’s business activity. The stock is trading 14% below our fair value estimate of $56 per share.

Portland General Electric has plenty of investment opportunities to serve growing electricity demand, meet Oregon’s clean energy requirements, and strengthen the system against natural disasters such as wildfires.

Oregon legislation requires PGE to cut carbon emissions on its system by 80% by 2030 and eliminate carbon emissions by 2040. Achieving these goals while maintaining reliability will require a large step-up in investment during the next decade.

PGE plans to invest $7.6 billion during the next five years, a 16% increase from its previous five-year plan. We think Portland General will receive regulatory approval for more clean energy projects in the next year. Transmission is another long-term growth investment opportunity.

Regulatory support for this growth plan will be critical. Oregon regulation is mostly constructive, with forward-looking rates and timely decisions. The state’s 20-year integrated resource plan and four-year action plan give PGE and regulators clarity on potential growth investments.

Portland General’s proposed $1.9 billion acquisition of Berkshire Hathaway Energy’s Washington utilities would diversify its regulatory exposure and growth plan, although the deal will face regulatory scrutiny.

An unfavorable decision in PGE’s 2025 general rate case, including a slight reduction in its allowed return on equity to 9.34%, was a shift from recent years. PGE had settled its previous four rate reviews—most recently in late 2023—demonstrating support from many stakeholders. The 2023 settlement also included initial steps to reduce volatility due to PGE’s regional power price exposure.

Electricity demand growth in the region should reduce regulatory risk as costs are spread over a larger customer base. PGE also benefits from renewable energy-specific ratemaking, reducing the need for lengthy base rate reviews.

PGE’s board created some uncertainty when it skipped a dividend increase in April 2020 before raising it in July 2020, keeping PGE’s annual dividend growth streak intact. We think dividend growth will trail earnings growth slightly while PGE goes through this large investment cycle.

Read more about Portland General Electric here.

Edison International

• Morningstar Price/Fair Value: 0.87
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.96%
• Industry: Utilities—Regulated Electric

Edison International is the parent company of Southern California Edison, an electric utility that distributes electricity to 5 million customers in a 50,000-square-mile area of Southern California, excluding Los Angeles. Trading 13% below our fair value estimate, Edison International has a moat rating of narrow. We think shares of this stock are worth $81 per share.

Edison International is well-positioned to grow faster than most utilities as California pursues ambitious clean energy and electrification goals. However, the Eaton wildfire in January 2025 that involved Edison’s equipment creates legal and regulatory uncertainties that could take years to resolve.

California’s quest to eliminate carbon emissions from its economy by 2045 will require a huge buildout of the state’s electric grid infrastructure. This includes investments to support grid safety, renewable energy, electric vehicles, distributed generation, and energy storage.

We forecast Edison’s capital investment will grow to nearly $8 billion annually by 2028, supporting a long runway of 7% annual core earnings growth, subject to regulatory approvals.

Constructive regulatory outcomes like Edison’s 2025-28 general rate case provide near-term clarity for the company’s investment plan. Operating-cost discipline will be critical for Edison to avoid large customer bill increases related to its investment plan.

Large equity issuances in 2019 and 2020—in part to fund the company’s $2.4 billion contribution to the state wildfire insurance fund and a higher equity allowance for ratemaking—along with higher borrowing costs have weighed on earnings growth the past five years.

That earnings drag is much smaller after regulators approved recovery and securitization of $3.6 billion of costs related to the 2017-18 wildfire and mudslides. That should boost cash in 2026. Settlement costs related to the Eaton fire could be a slight near-term drag, but provisions in California’s AB 1054 and SB 254 legislation should minimize long-term cash flow constraints.

Even if Edison faces modest 2025 fire costs and liabilities, we think it will be able to fund its growth investments and continue its 22-year streak of annual dividend increases.

Edison’s management team seems committed to retaining a small share of unregulated earnings likely tied to low-risk energy management businesses wrapped into Edison Energy. We don’t expect that business to have a material impact on shareholder returns in the near term.

Read more about Edison International here.

National Grid

• Morningstar Price/Fair Value: 0.91
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.71%
• Industry: Utilities—Regulated Electric

Next on our list of the best utilities stocks to buy is National Grid. National Grid owns and operates the electric transmission system in England and Wales. The stock is trading at a 9% discount to our fair value estimate of $96.50 per share.

National Grid owns and operates energy networks in the UK and the Northeastern US. The former accounts for around 60% of the profits, the latter for 40%.

Under the 2021-26 RIIO-T2 price control plan, the real return on equity for UK electricity transmission networks was 4.3%, well below the previous price control, due to very low interest rates in 2020. However, high inflation since 2022 has boosted the nominal rate. For RIIO-T3 starting in April 2026, the real return on equity will rise to 5.7%. Combined with a real cost of debt of 3.4%, this implies a real WACC of 4.42% and a nominal WACC of 6.6%. National Grid is confident it can achieve a nominal return on equity of 9% under RIIO-3 by delivering a good chunk of the efficiencies incentivized by the regulator. We concur with the group’s confidence, given its strong track record in the business and the improvements to the efficiency-sharing mechanism under RIIO-3. Accordingly, we project the group’s UK electricity transmission core business to deliver a nominal WACC of 7.1% under RIIO-3 and see no reason for material deterioration in returns beyond 2031. This warrants an economic moat rating upgrade to narrow.

In May 2024, National Grid released a five-year strategic plan calling for a 50% step-up in investments to be funded by a GBP 7 billion rights issue and noncore asset disposals. The step-up in investment is driven primarily by the construction of new transmission lines between wind farms in the North and South of England, where most demand is located.

The rights issue resulted in a 10% dilution. In addition, the dividend per share was rebased to reflect the new number of shares, resulting in a 20% drop in fiscal 2025 versus 2024. This was a turning point, since the firm has been increasing the dividend every year since 1998.

In February, National Grid rolled over its five-year business plan to 2031. It maintained its previous target of a 10% CAGR in regulated asset value and dividend growth in line with the UK Consumer Prices Index, including owner occupiers’ housing costs, or CPIH, while upping its EPS CAGR to 8%-10% from 6%-8% thanks to the return incentives it expected to achieve under RIIO-T3.

Read more about National Grid here.

American Electric Power Company

• Morningstar Price/Fair Value: 0.91
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 2.95%
• Industry: Utilities—Regulated Electric

American Electric Power is one of the largest regulated utilities in the US, providing electricity generation, transmission, and distribution to more than 5 million customers in 11 states. Trading 9% below our fair value estimate, American Electric Power Company has a moat rating of narrow. We think shares of this stock are worth $141 per share.

American Electric Power operates numerous utilities, providing investors with protection against any single adverse regulatory ruling.

Most of the company’s capital investment plan focuses on regulated investments. This investment supports management’s 7% to 9% earnings growth target from 2026-30. Management continues to raise its investment outlook and, as of May, now expects to achieve 9% annual earnings growth. We think that is achievable.

AEP plans to invest $78 billion in 2026-30 and has identified another $10 billion of possible incremental investment. This is up $6 billion from its plan announced in November 2025, which was up 33% from management’s prior five-year investment plan.

AEP’s system peak demand could increase by 63 gigawatts by year-end 2030, with load additions in Texas, the mid-Atlantic, and the southwest. Data centers account for more than 80% of this incremental load. The new demand is supported by either signed energy service agreements or letters of agreement, which give us confidence in the company’s growth outlook.

AEP’s plan focuses on transmission and distribution investments, which we think are the most attractive long-term growth opportunities given federal incentives to improve the efficiency of the US power grid.

Transmission and distribution investments account for nearly two-thirds of AEP’s investment plan. We think that environmental regulations, aging infrastructure, accelerating energy demand, and new gas and renewable generation support a long-term runway for transmission growth.

AEP plans to invest in new natural gas generation, for which it has secured turbines, and in renewable energy across its subsidiaries.

We expect AEP to narrow the gap between earned and allowed returns gradually. This will require constructive regulatory and legislative outcomes across its subsidiaries.

AEP is managing numerous strategic initiatives. AEP recently sold its commercial renewable energy portfolio and is now selling its retail and distributed resources business. It also recently sold a 19.9% interest in Ohio and Indiana & Michigan Transmission Companies, with proceeds to be used to reduce equity needs and support capital investment.

Read more about American Electric Power Company here.

DTE Energy

• Morningstar Price/Fair Value: 0.92
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.19%
• Industry: Utilities—Regulated Electric

DTE Energy owns two regulated utilities in Michigan that contribute 90% of earnings. DTE Energy is an affordable utilities stock, trading at an 8% discount to our fair value estimate of $157 per share. The regulated electric company earns a narrow moat rating.

A decade-long transformation of Michigan’s utility regulation and DTE Energy’s business mix has set up the company for a long runway of growth investment opportunities.

Michigan’s clean energy transition, focus on electric grid reliability, and emerging data center energy demand are the cornerstones of this growth.

Michigan’s utility rate regulation has turned mostly constructive in recent years, resulting in earnings growth and investment at DTE Energy’s electric and gas utilities. Another round of electric and gas regulatory reviews in 2026 will continue to test the regulatory environment.

We expect DTE’s electric and gas utilities will contribute more than 90% of DTE’s operating earnings. State requirements to improve energy reliability and accelerate clean energy investment are the bulk of management’s $36.5 billion investment plan during the next five years. That could grow as DTE signs more data center contracts. This is well above DTE’s historical levels of investment.

DTE Electric is investing heavily in gas power generation and renewable energy to replace its aging coal fleet. DTE’s 20-year integrated resource plan settlement in mid-2023 targets 6.5 gigawatts of new solar generation and 8.9 gigawatts of new wind generation while eliminating coal. State legislation in late 2023 includes a 100% clean energy standard by 2040. DTE also plans to add energy storage to serve data centers.

DTE’s gas and electric rate reviews and investment plan support our 8% annual earnings growth forecast, at the high end of management’s 6%-8% target. Commissioners have supported a 9.9% allowed return on equity to set electric rates. We think it supports growth while moderating customer bill impacts.

DTE’s nonutility business, DTE Vantage, is only about 10% of normalized earnings following the July 2021 split-off of DT Midstream. The unit has a growing portfolio of clean energy projects but faces an earnings drop-off when certain tax credits expire in 2029.

DTE’s board has raised the dividend every year since the reset following the DTM spinoff in mid-2021, most recently a 7% increase for 2026. We expect the dividend to grow in line with earnings for the foreseeable future.

Read more about DTE Energy here.

FirstEnergy

• Morningstar Price/Fair Value: 0.93
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.18%
• Industry: Utilities—Regulated Electric

Regulated electric company FirstEnergy rounds out our list of best utilities stocks to buy. FirstEnergy is an investor-owned holding company with operations across five mid-Atlantic and Midwestern states. The stock is 7% undervalued relative to our fair value estimate of $48 per share.

FirstEnergy’s regulated utilities are focused on accelerating investments that should result in solid earnings growth.

We expect the company to invest $36 billion through 2030, supporting more than 10% annual rate base growth. The capital investment plan supports our expectation that the company can achieve the high end of management’s 6%-8% annual core earnings growth target from 2025 to 2030. We also expect continued interest in data center development in FirstEnergy’s service territories, with contracted data center interest at 4.3 gigawatts as of early 2026.

FirstEnergy forecasts a 50% increase in total peak demand by 2035, in large part due to the significant data center demand across its territories, particularly in Pennsylvania, Ohio, and West Virginia.

Achieving constructive regulatory outcomes will be important to increase FirstEnergy’s regulated utilities’ returns, which remain below allowed returns. Higher earned returns also support our earnings growth outlook. Regulators in New Jersey, Maryland, Pennsylvania, and West Virginia have recently awarded supportive returns on equity.

Management has improved the company’s earned return on equity across its jurisdictions. FirstEnergy’s trailing 12-month return on equity was 9.8% as of March 31. We expect returns within management’s targeted 9.5%-10% range.

FirstEnergy has raised significant capital in the past two years to support its investments and shore up its balance sheet. FirstEnergy has sold a minority interest in FirstEnergy Transmission and issued equity.

Proceeds from the transactions have been used to pay down debt and fund additional capital investments. FirstEnergy aims to strengthen its balance sheet and achieve its targeted 14%-15% funds from operations/debt ratio. Balance-sheet strength has been a major focus for investors.

Read more about FirstEnergy here.

How to Find More of the Best Utilities Stocks to Buy

Investors who’d like to extend their search for top utilities stocks can do the following:

• Review Morningstar’s comprehensive list of utilities stocks to investigate further.
• Stay up to date on the utilities sector’s performance, key earnings reports, and more with Morningstar’s utilities sector page.
• Read Morningstar’s Guide to Stock Investing to learn how our approach to investing can inform your stock-picking process.
• Use the Morningstar Investor screener to build a shortlist of utilities stocks to research and watch.