The Best Utilities Stocks to Buy

These 12 undervalued utilities stocks look attractive today.

Tori Brovet Oct 9, 2026

Securities in This Article

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 fell 1.50%, while the Morningstar US Total Market Index gained 15.07%.

The 12 Best Utilities Stocks to Buy Now

These were the most undervalued utilities stocks that Morningstar’s analysts cover as of Oct. 6, 2026.

PG&E PCG
Edison International EIX
Hawaiian Electric Industries HE
National Grid NGG
Portland General Electric POR
DTE Energy DTE
Dominion Energy D
Alliant Energy LNT
Duke Energy DUK
NextEra Energy NEE
Sempra Energy Holdings SRE
WEC Energy Group WEC

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 Oct. 6, 2026.

PG&E

Morningstar Price/Fair Value: 0.61
Morningstar Uncertainty Rating: Medium
Morningstar Economic Moat Rating: None
Forward Dividend Yield: 1.60%

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 5.7 million electricity customers and 4.6 million gas customers in 47 of the state’s 58 counties. The stock is trading 39% below our fair value estimate of $20.50 per share.

With its 2019-20 bankruptcy well behind it, PG&E is in the early stages of a large growth opportunity. California’s ambitious energy and environmental policies, including eliminating economywide carbon emissions by 2045, will require substantial infrastructure investment to electrify buildings and transportation.
Even with a slight dip in growth investment in 2026, we still expect PG&E to invest more than $73 billion in 2026-30, leading to at least 9% annual earnings growth, one of the highest growth rates among US utilities. Management’s recent near-term investment deferrals shouldn’t affect long-term growth.
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 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, and other stakeholders. Shareholders lost some $30 billion of value from settlements, fines, and costs. 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 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. PG&E has avoided any major safety or operational missteps for several years.
PG&E has faced other major challenges during the last 30 years. The deadly 2010 San Bruno gas pipeline explosion resulted in some $3 billion of lost shareholder value from fines and penalties. PG&E also spent 2001-04 in bankruptcy during California’s energy crisis due to regulators’ misguided deregulation effort.

Travis Miller, Morningstar senior analyst

Edison International

Morningstar Price/Fair Value: 0.67
Morningstar Uncertainty Rating: Medium
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 6.47%

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. Edison International is an affordable utilities stock, trading at a 33% discount to our fair value estimate of $81 per share. The regulated electric company earns a narrow economic moat rating.

Edison International is well positioned to grow faster than most utilities as California pursues ambitious clean energy and electrification goals. However, past and future possible wildfire liabilities create more risk than most utilities face.
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 costs and liabilities from the 2025 Eaton Fire, 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.

Travis Miller, Morningstar senior analyst

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Hawaiian Electric Industries

Morningstar Price/Fair Value: 0.74
Morningstar Uncertainty Rating: High
Morningstar Economic Moat Rating: None
Forward Dividend Yield: 0.00%

Next on our list of the best utilities stocks to buy is Hawaiian Electric Industries. Hawaiian Electric Industries is the parent company of three Hawaii-based regulated utilities and owns a 10% minority interest in Hawaii’s American Savings Bank. The stock is trading at a 26% discount to our fair value estimate of $12 per share.

Hawaiian Electric Industries will derive nearly all of its income from its electric utility after selling a 90% stake in its American Savings Bank subsidiary in late 2024.
Shareholders need to be comfortable with a wide range of outcomes due to potential significant liabilities from the August 2023 wildfires in Maui. Hawaiian Electric has received approval to settle all liabilities from the wildfires for $1.99 billion, which includes $75 million that the company agreed in November 2023 to pay as part of the One Ohana fund.
With the final settlement approved, Hawaiian made the first payment earlier this year. To fund the settlement, Hawaiian has taken several steps in addition to its American Savings Bank sale, including stock issuances and an accounts receivable facility.
Recently passed legislation in Hawaii should support a financially viable utility going forward. The most important is legislation that requires utilities regulators to establish a liability cap for future wildfires in the state. The liability cap will be determined by regulators and will take more than a year to resolve.
Hawaiian is on track to invest $700 million-$750 million, a significant increase from the $368 million invested in 2025. Wildfire mitigation investments are the main reason for the step-up. The company plans to invest $2.15 billion-$2.4 billion over 2026-28. Hawaiian Electric’s ability to securitize certain capital investments is a key source of funding for wildfire mitigation investments.
Hawaiian is working to rebase rates outside a typical rate base application. Regulatory risk is significant. A constructive outcome is critical to improve core earned return on equity, which was just 5.7% at the end of the quarter. HEI’s base allowed return on equity for ratemaking is 9.5%. Importantly, the rate rebase outcome will set rates for the next five years. A final decision is expected in April 2027, with an interim decision possible by year-end.

Andrew Bischof, Morningstar senior analyst

National Grid

Morningstar Price/Fair Value: 0.78
Morningstar Uncertainty Rating: Low
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 4.22%

National Grid owns and operates the electric transmission system in England and Wales. Trading 22% below our fair value estimate, National Grid has an economic moat rating of narrow. We think shares of this stock are worth $98 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%.
For the 2026-31 RIIO-T3 UK electricity regulatory regime, the real return on equity rose to 5.7% from 4.3%. Combined with a real cost of debt of 3.4%, this implies a real weighted average cost of capital 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.
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 was primarily driven by the construction of new transmission lines between wind farms in the North and South of England.
The rights issue resulted in a 10% dilution. In addition, the dividend per share was rebased, 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 2026, 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 expects to achieve under RIIO-T3.
In July 2026, National Grid agreed to invest $1.75 billion to fund a very large CCGT that will supply dedicated electricity to a Microsoft data center campus. The transaction gives National Grid exposure to a potentially significant new growth avenue as artificial intelligence-driven power demand accelerates. However, scaling this opportunity could eventually require additional capital.

Tancrede Fulop, Morningstar senior analyst

Portland General Electric

Morningstar Price/Fair Value: 0.79
Morningstar Uncertainty Rating: Low
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 4.98%

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 firm earns a narrow economic moat rating, and the shares of its stock look 21% undervalued relative to our $56 fair value estimate.

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 amid fast-growing electricity demand among large customers 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 that investment could go higher if Portland General receives regulatory approval for more clean energy projects. Transmission is another growth investment opportunity.
Oregon regulation has turned 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. PGE is seeking another general rate increase in 2027.
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.

Travis Miller, Morningstar senior analyst

DTE Energy

Morningstar Price/Fair Value: 0.82
Morningstar Uncertainty Rating: Low
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 3.63%

DTE Energy owns two regulated utilities in Michigan that contribute 90% of earnings. Trading 18% below our fair value estimate, DTE Energy has an economic moat rating of narrow. We think shares of this stock are worth $157 per share.

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 new data center energy demand support 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 2026-27 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 investment levels.
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 GW 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 to help offset the expiration of tax credits 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.

Travis Miller, Morningstar senior analyst

Dominion Energy

Morningstar Price/Fair Value: 0.85
Morningstar Uncertainty Rating: Medium
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 4.31%

Based in Richmond, Virginia, Dominion Energy is an integrated energy company with over 31 gigawatts of electric generation capacity and more than 91,000 miles of electric transmission and distribution lines. Dominion Energy is an affordable utilities stock, trading at a 15% discount to our fair value estimate of $73 per share. The regulated electric company earns a narrow economic moat rating.

Dominion Energy is a predominantly regulated utility with more than 90% of its earnings coming from electric and gas utilities subject to constructive state regulation in Virginia, North Carolina, and South Carolina.
Virginia legislation brought significant changes to utility regulation in the state. The legislation brings allowed returns on equity more in line with peers’. It also replaced the triennial rate reviews with traditional biennial base rate reviews. The most recent rate review allayed concerns over the regulatory environment, including higher allowed returns and continuation of rate riders.
Dominion’s Virginia service territory is among the best-positioned to benefit from data center electricity demand. The recent increase in regional capacity prices highlights the significant need for new generation to meet forecast electricity demand growth in Dominion’s territory.
Over the next 15 years, the mid-Atlantic grid operator forecasts 5.4% annualized electricity growth in Virginia, largely driven by the region’s growing data center needs. Dominion reported nearly 54 gigawatts of data center capacity interest in Virginia as of August 2026, though we don’t expect all of it to materialize.
Unlike other offshore wind projects, Dominion’s will be rate-regulated up to $10.3 billion, mitigating investor risk for a project with greater execution risk than onshore renewable energy development. However, shareholders share any cost overruns. Management’s most recent cost projection for Coastal Virginia Offshore Wind was $11.65 billion. Given its cost relative to alternative generation options, the project has increased political and regulatory risk for Dominion.
In May 2026, NextEra Energy offered to acquire Dominion Energy. Should the transaction be approved, Dominion shareholders would receive 0.8138 shares of NextEra Energy plus a one-time $360 million cash payment upon closing and own approximately 25.5% of the combined company.
Dominion will be able to leverage NextEra’s strong balance sheet to accelerate investment, particularly in Virginia. We view the transaction as in the best interest of shareholders.

Andrew Bischof, Morningstar senior analyst

Alliant Energy

Morningstar Price/Fair Value: 0.85
Morningstar Uncertainty Rating: Low
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 3.27%

Alliant Energy is the parent of two regulated utilities, Interstate Power and Light and Wisconsin Power and Light. Trading 15% below our fair value estimate, Alliant Energy has an economic moat rating of narrow. We think shares of this stock are worth $77 per share.

Alliant Energy operates two utilities in the Midwest, Wisconsin Power and Light and Iowa-based Interstate Power and Light.
The company’s $13.4 billion capital investment plan for 2026-29 is nearly double its plan from less than four years ago. The increase is in large part to support increasing data center electricity demand. Alliant forecasts a 60% increase in projected demand by 2031.
We expect continued investments to support this growth. Management has said they are continuing to plan for growth beyond its base case. We forecast the company will achieve the high end of management’s 5%-7% annual earnings growth target through 2027, and exceed management’s 7%-plus growth expectation from 2027-29.
Alliant has five data center customers as of early 2026, representing 3.4 gigawatts of demand. We think management will continue to identify additional data center opportunities.
Three of the data center campuses have started construction in Alliant’s service territory. The other two have signed electric service agreements. Management has discussed 2-4 GW of additional data center opportunities that could materialize later in the planning period.
Alliant benefits from operating in two constructive regulatory jurisdictions. To maintain earned returns near allowed returns during this period of high investment, management has worked to reduce regulatory lag, has received above-average allowed returns across its subsidiaries, and aims to continue reducing operating costs in the near term.
Wisconsin regulators approved subsidiary WPL’s 2026-27 rate case settlement, including a 9.8% allowed return on equity. The decision was in line with our expectations and supports our constructive view of Wisconsin regulation. IPL shouldn’t need to file for new rates for at least four years.
American Transmission, which we consider a wide-moat business, is tucked away from consolidated results (16% equity interest). Transmission offers higher returns relative to other rate-regulated investments.

Andrew Bischof, Morningstar senior analyst

Duke Energy

Morningstar Price/Fair Value: 0.88
Morningstar Uncertainty Rating: Low
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 3.75%

Duke Energy is one of the largest US utilities, with subsidiaries in the Carolinas, Indiana, Florida, Ohio, and Kentucky delivering electricity to more than 8 million customers. Trading 12% below our fair value estimate, Duke Energy has a narrow moat rating. We think shares of this stock are worth $131 per share.

Duke Energy is one of the largest utilities in the United States. It has significant regulatory clarity across its numerous subsidiaries, with the majority of investment recovered through customer ratemaking mechanisms that significantly reduce regulatory lag.
Florida is Duke’s most constructive and attractive jurisdiction, with higher-than-average growth and best-in-class regulation that allows for higher-than-average returns on equity, forward-looking rates, and automatic base-rate adjustments.
In North Carolina, Duke’s largest service territory, the outlook has improved significantly. Legislation allows for multiyear rate plans, including rate increases for projected capital investments. State legislation allows for performance incentive mechanisms, usage-decoupled rates for residential customers, and supports utilities’ investments. Proposed settlements support our view that regulation will remain constructive.
Indiana also historically has been constructive. Duke’s subsidiary in the state is allowed to use forward test years and above-average return on equity to set rates. Regulators support Duke’s investments in new natural gas generation, renewable energy, and battery storage.
Residential and commercial customer electricity demand growth remains a significant tailwind for Duke. Annual customer demand growth remains over 2% at its Carolinas and Florida subsidiaries. Data center demand is expected to grow to more than 10% of commercial load by 2030.
Duke’s current 1.5%-2% annual growth in electricity demand accelerates to 3%-4% by 2027 in their forecast, supporting additional capital investment and growth. Indiana and the Carolinas are well-positioned to capture data center demand.
We expect Duke to invest more than $103 billion through 2030, in line with management’s updated plan and supporting our expectations for earnings growth at the high end of management’s 5%-7% annual earnings growth range. This excludes $5 billion-$10 billion of capital investment opportunities to serve large loads in Florida and Indiana.

Andrew Bischof, Morningstar senior analyst

NextEra Energy

Morningstar Price/Fair Value: 0.89
Morningstar Uncertainty Rating: Medium
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 3.20%

NextEra Energy’s regulated utility, Florida Power & Light, is the largest rate-regulated utility in the state. NextEra Energy is an affordable utilities stock, trading at an 11% discount to our fair value estimate of $88 per share. The regulated electric company earns a narrow economic moat rating.

NextEra Energy’s high-quality regulated utility in Florida and energy development business give investors the best of both worlds: a secure dividend and above-average growth potential.
NextEra’s regulated utility, Florida Power & Light, benefits from constructive regulation that offers high allowed returns, little regulatory lag, and adjustments to incorporate interest rate changes. We expect the utility to invest $73 billion through 2030. Growth opportunities include continued solar generation buildout, storm-hardening investments, and data center demand.
FPL plans to invest $10 billion-$11 billion annually in 2026 and 2027, increasing to $12 billion-$15 billion annually through 2032. Underlying population growth and increased data center demand support the step-up in capital investment. There are up to 12 gigawatts of long-term interest from data centers with at least one project expected to be announced by year-end.
The company’s highly contracted competitive energy business, NextEra Energy Resources, has proved to be a best-in-class operator and developer of renewable energy. The company was an early adopter of wind generation, building a competitive advantage by securing some of the country’s most desirable locations and locking in 20-year contracts with price escalator clauses.
As demand for renewable energy begins to slow, NEER will look to develop natural gas generation as part of data center hubs, with a total long-term opportunity exceeding 20 gigawatts. NextEra aims to develop up to 8 GW of new natural gas generation in 2030-32. NEER’s 2026-29 development plan, totaling 44 GW-61 GW, highlights the near-term demand for renewable energy.
In May 2026, NextEra Energy offered to acquire Dominion Energy for $67 billion. We view the transaction as allowing the company to accelerate its data center ambitions, which had trailed its regulated peers, by using Dominion Energy’s expertise and relationships to grow NextEra’s data center hub plans. It would also increase NextEra’s total business from regulated utilities to 80% of earnings, up from the current 70%, which we view positively.

Andrew Bischof, Morningstar senior analyst

Sempra Energy Holdings

Morningstar Price/Fair Value: 0.89
Morningstar Uncertainty Rating: Medium
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 3.29%

Sempra serves one of the largest utility customer bases in the United States. Sempra Energy Holdings is an affordable utilities stock, trading at an 11% discount to our fair value estimate of $90 per share. The utilities company earns a narrow economic moat rating.

Sempra’s investment opportunities at its regulated utilities in California and Texas remain its primary growth driver.
Sempra’s $65 billion capital investment plan through 2030 focuses on accelerating investment needs in Texas. Sempra’s Texas utility will benefit from a significant increase in investment, primarily for grid resiliency, reliability requirements, and expansion of the oil and gas industry in the state. Significant customer growth is also driving investment in growth.
Oncor continues to be Sempra’s primary growth driver with a five-year $47.5 billion capital investment plan, supporting 17% annualized rate base growth. An improving regulatory environment in Texas supports these growth opportunities. Recent legislation reduces regulatory lag by using rate trackers to recover most capital investments.
Sempra to direct more than 70% of its total capital investment toward high-growth Texas, driving nearly 20% annual rate base growth, compared with just 5% at its California subsidiaries. On a consolidated basis, we expect more than 11% annual rate base growth.
Oncor’s base rate review outcome highlights the state’s constructive regulation. The settlement is based on a 9.75% allowed return on equity, up from the previous 9.7%, and an increased equity layer.
Oncor is receiving significantly large-load connection requests. We viewed a constructive outcome to Oncor’s rate review as critical to supporting continued growth in Texas. Texas regulators have historically been constructive, allowing utilities to invest with confidence and earn a return on the state’s growth.
Sempra’s California utility is benefiting from growth investments to support the state’s clean energy mandates. Mostly constructive rate regulation supports that growth. California’s regulatory environment has remained constructive for Sempra, as its emphasis on distribution-related safety and reliability infrastructure upgrades aligns well with the state’s policy priorities.
Management has sold a 75% interest in Sempra Infrastructure Partners to fund regulated capital investments. We continue to like Sempra’s pivot toward a more regulated profile.

Andrew Bischof, Morningstar senior analyst

WEC Energy Group

Morningstar Price/Fair Value: 0.89
Morningstar Uncertainty Rating: Low
Morningstar Economic Moat Rating: Narrow
Forward Dividend Yield: 3.69%

Regulated electric company WEC Energy Group rounds out our list of best utilities stocks to buy. WEC’s electric and gas utility businesses serve electric and gas customers in Illinois, Michigan, Minnesota, and Wisconsin service territories. The stock is 11% undervalued relative to our fair value estimate of $116 per share.

WEC Energy Group is the largest Midwest utility, with $34 billion of rate base from mostly regulated operations.
Most of WEC’s earnings come from areas with what we view as constructive regulation, such as Wisconsin and the Federal Energy Regulatory Commission. Its commercial renewable energy business accounts for the remainder of earnings, with limited risk and regulated-like returns.
We expect the company to invest $37.5 billion through 2030, which includes its investment in American Transmission. This investment plan supports our forecast that the company will be at the high end of management’s 7%-8% annual earnings growth target.
In Wisconsin, the company enjoys rates based on two-year forward test years and a ratemaking that allows it to share with customers any earnings above its allowed return on equity. We expect a constructive outcome in WEC Energy’s current rate case, consistent with historical precendent.
Achieving a constructive outcome in the company’s Wisconsin rate case was key to regaining investors’ trust in the state’s regulatory environment. Regulators maintained the company’s 9.8% allowed ROE and signaled support for the significant investment needs across its service area. We expect constructive regulation to continue with the company’s current rate case filing.
We expect the regulatory environment to remain challenging in Illinois, which represents 14% of WEC’s rate base and a lower share of earnings. The firm has directed capital from Illinois toward more attractive investment opportunities elsewhere, resulting in the company’s Illinois rate base shrinking to 10% of its total by 2030.
The company’s capital investment plan encompasses a mix of generation technologies that support its growing electricity demand. WEC will invest in natural gas, solar, battery storage, and wind generation development through 2030.
The company’s capital investment program is expected to support accelerating electricity demand. New demand is anticipated to come from economic development in southeastern Wisconsin, particularly new data centers. An additional data center campus north of Milwaukee should contribute to demand growth.

Andrew Bischof, Morningstar senior analyst

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.