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 17.93%, while the Morningstar US Market Index gained 8.39%. The utilities stocks that Morningstar covers look 13.7% overvalued as a group.

The 7 Best Utilities Stocks to Buy Now

These were the most undervalued utilities stocks that Morningstar’s analysts cover as of July 31, 2025.

1. Edison International EIX
2. PG&E PCG
3. Portland General Electric POR
4. Essential Utilities WTRG
5. Eversource Energy ES
6. New Jersey Resources NJR
7. 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, as well as companies that do not have a moat. 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 July 31, 2025.

Edison International

• Morningstar Price/Fair Value: 0.65
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 6.35%
• Industry: Utilities – Regulated Electric

Regulated electric company Edison International is the cheapest stock on our list of the best utilities stocks to buy. 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. The stock is trading 35% below our fair value estimate of $80 per share.

Read more about Edison International here.

PG&E

• Morningstar Price/Fair Value: 0.74
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 0.71%
• Industry: Utilities – Regulated Electric

PG&E is a holding company whose main subsidiary is Pacific Gas and Electric, a regulated utility operating in Central and Northern California that serves 5.3 million electricity customers and 4.6 million gas customers in 47 of the state’s 58 counties. This cheap stock looks 26% undervalued and has a fair value estimate of $19 per share.

PG&E emerged from bankruptcy in July 2020 after 17 months of negotiations with 2017-18 Northern California fire victims, insurance companies, politicians, lawyers, and bondholders. Shareholders lost some $30 billion in settlements, fines, and costs but retained control of the company. Bondholders were mostly made whole.

PG&E now is well positioned for growth. California has aggressive energy and environmental policies that will require substantial infrastructure investment. We expect PG&E to invest more than $12 billion annually on average in 2025-28, leading to 9% annual earnings growth, one of the highest growth rates among US utilities.

California has some of the most constructive utility rate regulation in the US with usage-decoupled rates, four-year rate reviews, and allowed returns above the industry average. The 2023-26 general rate case ended with what we consider a constructive outcome that supports PG&E’s investments in clean energy and safety.

California aims to eliminate all carbon emissions from its economy by 2045, in part by electrifying buildings and transportation. This upside for PG&E’s electric business is partially offset by the uncertain future of PG&E’s natural gas business, which will likely shrink as a share of earnings.

PG&E will always face public and regulatory scrutiny as the largest utility in California. Deadly wildfires and power outages have escalated that scrutiny. Legislative and regulatory changes during and since PG&E’s bankruptcy have reduced the company’s financial risk, but the state’s inverse condemnation strict liability standard remains a concern. Mending PG&E’s relationships with customers, regulators, politicians, and investors will take time.

The $59 billion bankruptcy was PG&E’s second in 20 years. The 2020 bankruptcy exit terms all but guarantee a state takeover if PG&E has any major safety or operational missteps. The bankruptcy followed less than a decade after the deadly 2010 San Bruno gas pipeline explosion. We estimate fines and penalties from the San Bruno disaster and allegations of poor recordkeeping resulted in $3 billion of lost shareholder value.

Read more about PG&E here.

Portland General Electric

• Morningstar Price/Fair Value: 0.76
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 5.11%
• Industry: Utilities – Regulated Electric

Next on our list of the best utilities stocks to buy is Portland General Electric. 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 at a 24% discount to our fair value estimate of $54 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 two decades.

PGE plans to invest $6.5 billion during the next five years, more than a 20% increase in its investment rate of the last decade. The new investments include large solar and battery projects that could total $1 billion by 2030. Transmission is another key investment area in the outer years of the company’s plan.

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.

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 power price exposure, unusual among US-regulated utilities. PGE received less favorable regulatory outcomes in 2015 and 2016.

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.

The board made investors nervous 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.

Essential Utilities

• Morningstar Price/Fair Value: 0.84
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.72%
• Industry: Utilities – Regulated Water

Essential Utilities is a Pennsylvania-based holding company for US water, wastewater, and natural gas distribution utilities. The firm earns a narrow economic moat rating, and the shares of its stock look 16% undervalued relative to our $44 fair value estimate.

For more than 50 years, Essential Utilities—formerly Aqua America—was one of the few pure-play water utilities in the United States. But its $4.3 billion acquisition of Peoples Natural Gas in March 2020 made the company nearly 50% larger and diversified its earnings mix.

The gas business contributes about one third of earnings on a normalized basis. The gas business is growing faster than the water business for now due to infrastructure upgrades. This growth at the gas business is in part making up for slowing municipal water acquisitions, which have long been an important growth driver.

Although water conservation has reduced demand for several decades, Essential is growing earnings at the water business by replacing and upgrading old infrastructure. We expect annual organic capital investment to remain well above historical levels for at least the next five years.

Essential has a long, successful track record of acquiring small, typically municipal water systems. So-called fair market value laws in certain states encourage this consolidation. These laws require Essential to pay assessed value for a municipal system but also allow Essential to add the system assets at that assessed value, effectively eliminating goodwill. The municipalities benefit by ensuring they get fair prices, and Essential shareholders benefit by ensuring the company doesn’t overpay for growth.

In the US, 85% of the population is served by a municipal water utility, so there are plenty of acquisition opportunities. Tighter environmental standards, particularly involving per- and polyfluoroalkyl substances, could raise costs for municipalities, leading them to seek out acquirers like Essential that have greater scale and expertise.

We expect 6% annual earnings and dividend growth during the next three years, in line with management’s target. Growth could trend higher if Essential can close the pending $276.5 million Delcora acquisition and increase water acquisitions. Long term, we assume an average $100 million of water acquisitions annually.

Read more about Essential Utilities here.

Eversource Energy

• Morningstar Price/Fair Value: 0.91
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 4.55%
• Industry: Utilities – Regulated Electric

Eversource Energy is a diversified holding company with subsidiaries that provide rate-regulated electric and gas distribution service to more than 4 million customers in the Northeast US. This cheap stock looks 9% undervalued compared with its fair value estimate of $73 per share.

Eversource Energy has returned to its roots as a mostly rate-regulated electric and gas distribution utility in the Northeast after exiting a multiyear effort to develop several large offshore wind projects and selling its water utility.

Even though New England doesn’t have the data center or manufacturing growth like many other US regions, we think Eversource’s utilities have ample growth opportunities to build electric and gas infrastructure to support the Northeast states’ aggressive clean energy goals.

We assume Eversource invests $19 billion in 2025-28 at its electric and gas utilities to help meet regional clean energy targets and strengthen the grid. This should support 6% annual average earnings and dividend growth.

Some state regulators have pushed back on customer rate increases, limiting the upside for shareholders. Challenging rate regulation in Connecticut could affect Eversource’s growth plans in the state. However, subsidiary Connecticut Light and Power represents only about 20% of Eversource’s consolidated earnings. If regulation in the state becomes more constructive, Eversource might boost its growth investments.

Massachusetts remains an attractive area for investment with constructive regulation, support for grid modernization investments, and ambitious clean energy legislation. Almost all of Eversource’s revenue is decoupled from usage, supporting consistent cash flow growth.

Electric transmission also remains a key earnings growth driver. Eversource has averaged $1 billion of investment in transmission annually for the last decade and we expect that to continue. Transmission earnings are more than 40% of consolidated earnings and climbing. Transmission to connect offshore wind projects is a growth opportunity.

Eversource was one of the first US utilities to pursue offshore wind development, but management reversed course in 2022. It took nearly $2 billion of impairment charges after tax in 2023 to exit its 50% stake in three projects. Despite the losses, Eversource will avoid potential cost overruns and have more flexibility to fund growth projects with regulated returns at its utilities.

Read more about Eversource Energy here.

New Jersey Resources

• Morningstar Price/Fair Value: 0.94
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.92%
• Industry: Utilities – Regulated Gas

New Jersey Resources is an energy services holding company with regulated and nonregulated operations. Trading 6% below our fair value estimate, New Jersey Resources has an economic moat rating of narrow. We think shares of this utilities stock are worth $49 per share.

New Jersey Resources is one of the few US utilities that has committed to maintaining and growing a diverse set of businesses, including rate-regulated natural gas distribution, gas midstream assets, and renewable energy investments. Management’s investments across all of its companies have paid off nicely for investors so far.

We forecast an 8% annual average consolidated earnings growth rate, in line with management’s 7%-9% target and higher than the growth rate outlooks of most US utilities.

However, this earnings growth could be lumpy. Unusually high earnings at NJR’s energy services business the last three years and a gain on sale at its renewable energy business in 2024 has lifted earnings nearly 50% since 2021. Even with core growth continuing across its businesses, a reversal of those unusual benefits could keep consolidated earnings mostly flat through fiscal-year 2026.

At NJR’s core New Jersey gas distribution utility, constructive state regulation and customer growth have produced steady earnings growth. This supports a well-covered, growing dividend. That legacy business is set to contribute about 65% of earnings.

New Jersey regulators approved what we considered a constructive settlement in NJR’s 2024 rate review, resulting in a $157 million annualized rate increase. This continues a string of what we considered constructive rate review outcomes in 2016, 2019, and 2021.

Although NJR’s 9.6% allowed ROE is lower than other utilities, NJR receives rate adjustments for some of its major growth projects. We expect NJR can grow earnings at its utility by 6% annually based on 1% customer growth and nearly $500 million of annual infrastructure investments.

At NJR’s nonutility businesses, we expect the company to invest nearly $900 million in new solar projects during the next three years. These are primarily projects for commercial customers after NJR sold its residential solar business in late 2024.

NJR’s $367.5 million acquisition of the Leaf River (Mississippi) gas storage facility in 2019 has produced exceptional returns when gas markets become volatile. We think investment to expand the facility will yield attractive returns.

Read more about New Jersey Resources here.

FirstEnergy

• Morningstar Price/Fair Value: 0.97
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.17%
• 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 10 regulated distribution utilities across six mid-Atlantic and Midwestern states. The stock is fairly valued relative to our fair value estimate of $44 per share.

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

We expect the company to invest $28 billion through 2029, an 8% increase from its prior plan and supporting 9% annual rate base growth. The capital investment plan supports our expectation that the company can achieve the midpoint of management’s 6%-8% annual core earnings growth target from 2025-29.

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 solid returns on equity. An Ohio rate case is ongoing.

FirstEnergy has raised significant capital in the past two years to support its investments and shore up its balance sheet. In 2022, it raised $3.4 billion, including $2.4 billion from selling a 19.9% minority stake in subsidiary FirstEnergy Transmission and $1 billion from new market equity. In early 2023, the company agreed to sell another 30% stake in FirstEnergy Transmission for $3.5 billion.

Proceeds from the transactions will be 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. With the proceeds from capital recycling, FirstEnergy will be one of the few utilities that we expect won’t need to issue significant equity to fund its capital investment plan.

In 2021, FirstEnergy reached an agreement with the US Department of Justice to settle its involvement in the 2020 Ohio bribery scheme. The company completed its obligations under the three-year deferred prosecution agreement. The utility has settled with the Ohio Organized Crime Investigations Commission and the SEC. We think these settlements were in shareholders’ best interests.

FirstEnergy increased its dividend 5% in 2025. We expect dividend growth in line with earnings growth.

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.

James Ubi contributed to this article.