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.

The utilities sector saw a strong first quarter, followed by a more recent slowdown. “All things considered, we believe the recent pullback reflects valuations that had become too hot and that the sector is now fairly valued,” says Morningstar energy analyst Travis Miller.

“As data centers increasingly contribute to earnings, we now think the sector’s 6%-8% average annual earnings growth could extend beyond 2030,” Miller adds.

In the year to date, the Morningstar US Utilities Index rose 8.03%, while the Morningstar US Market Index gained 10.61%.

The 3 Best Utilities Stocks to Buy Now

These were the most undervalued utilities stocks that Morningstar’s analysts cover as of July 7, 2026.

1. PG&E PCG
2. National Grid NGG
3. Portland General Electric POR

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 7, 2026.

PG&E

• Morningstar Price/Fair Value: 0.84
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 1.16%
• Industry: Utilities—Regulated Electric

Regulated electric company PG&E is the most affordable stock on our list of the best utilities stocks to buy. 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. The stock is trading 16% below our fair value estimate of $20.50 per share.

With PG&E’s 2019-20 bankruptcy well behind it, the company is entering a period of huge growth potential.

California’s ambitious energy and environmental policies, including eliminating economywide carbon emissions by 2045, will require substantial infrastructure investment to electrify buildings and transportation.

We expect PG&E to invest more than $14 billion annually on average in 2026-30, leading to at least 9% annual earnings growth, one of the highest growth rates among US utilities.

California has constructive utility rate regulation that includes usage-decoupled rates, four-year rate reviews, and allowed returns above the industry average. PG&E’s 2023-26 general rate case ended with what we consider a constructive outcome that supports clean energy and safety investment. PG&E’s 2027-30 rate proposal extends its growth plan.

Electrification and decarbonization likely will mean PG&E’s natural gas business shrinks as a share of total earnings.

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 of value from settlements, fines, and costs but retained control of the company. Bondholders were mostly made whole.

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 2020 bankruptcy exit terms all but guarantee a state takeover if PG&E has any major safety or operational missteps.

PG&E also faced fines and penalties related to the deadly 2010 San Bruno gas pipeline explosion and poor recordkeeping, resulting in what we estimate was $3 billion of lost shareholder value. PG&E spent 2001-04 in bankruptcy during California’s energy crisis due to regulators’ misguided deregulation effort.

Read more about PG&E here.

National Grid

• Morningstar Price/Fair Value: 0.86
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.90%
• Industry: Utilities—Regulated Electric

National Grid owns and operates the electric transmission system in England and Wales. Trading 14% below our fair value estimate, National Grid has an economic moat rating of narrow. We think shares of this stock are worth $96.50 per share.

National Grid owns and operates energy networks in the UK and the Northeastern United States. 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 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 from 6%-8% to 8%-10% thanks to the return incentives it expected to achieve under RIIO-T3.

Read more about National Grid here.

Portland General Electric

• Morningstar Price/Fair Value: 0.94
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.04%
• 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 6% discount to 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.

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.