Utilities sector: Definition & how to invest

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Utilities stocks offer some of the most stable and reliable investment opportunities on the market. But government regulation may limit revenue and growth potential.

What are utilities stocks?

Utilities stocks belong to companies within the utilities sector of the stock market. According to the Global Industry Classification Standard, there are 11 stock market sectors, each defined by a specific industry or type of business. Stock sectors help investors gauge or invest in select pieces of the market.

The utilities sector is comprised of companies responsible for basic public services and amenities, including water, gas and electricity. As a result of the public-facing nature of the sector, it’s one of the most heavily regulated, contributing to stable dividends and decreased volatility.

What subcategories does it include?

Companies within the utilities sector can be publicly or privately owned and break down into the following subindustries:

Electric. Companies that create or provide electricity for commercial and residential homes belong to this subindustry.
Gas. Unlike companies that produce gas from the energy sector, gas utilities distribute manufactured and natural gas to businesses and households.
Water. Companies are responsible for buying and distributing water, including water treatment facilities.
Multiutility. These companies provide more than one utility, combining gas, water, electricity or other services in their public offerings.
Renewable energy. Independent power producers and renewable electricity providers fall into this category, including solar, wind, geothermal and hydropower energy providers.

How to invest in the utilities sector

While it’s not possible to directly invest in a stock sector, you can invest in what the sector tracks by purchasing stocks and exchange-traded funds (ETFs).

Individual stocks let investors target the specific companies they want to back. Stocks can offer high-yield returns, but tend to be more volatile than ETFs.

ETFs track the entire sector and offer more comprehensive portfolio exposure. But they come with expense ratios — typically in the 0.03% to 2.5% range.

To purchase stocks or ETFs, you’ll need a brokerage account. Here’s a quick breakdown of the investment process:

Pick a platform. Explore your platform options to find the broker best suited to your investment goals.
Open an account. Complete applications for web-based brokerages online with just a few pieces of personal information.
Fund your account. Transfer money to your new brokerage account to begin trading.
Select your securities. Use your platform’s research tools or rely on third-party research to find stocks and funds by sector.
Watch your investments. Log into your brokerage account to monitor your investments.

What stocks are in the utilities sector?

See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.

Company summary
The AES Corporation, together with its subsidiaries, operates as a power generation and utility company in the United States and internationally. The company owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries; owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market. It uses various fuels and technologies to generate electricity, such as coal, gas, hydro, wind, solar, and biomass, as well as renewables comprising energy storage and landfill gas. The company owns and/or operates a generation portfolio of approximately 32,109 megawatts and distributes power to 2.7 million customers. The company was formerly known as Applied Energy Services, Inc. and changed its name to The AES Corporation in April 2000. The AES Corporation was incorporated in 1981 and is headquartered in Arlington, Virginia.
Historical performance
Stock information
- Market capitalization: $10012421120
- P/E ratio: 9.25
- PEG ratio: 1.0921
- Dividend yield: 0.0506%
Get more detailed information and learn how to buy AES.US stock
Company summary
American Water Works Company, Inc., through its subsidiaries, provides water and wastewater services in the United States. It offers water and wastewater services on military installations; and undertakes contracts with municipal customers, primarily to operate and manage water and wastewater facilities, as well as offers other related services. The company also operates approximately 80 surface water treatment plants; 520 groundwater treatment plants; 190 wastewater treatment plants; 54,500 miles of transmission, distribution, and collection mains and pipes; 1,200 groundwater wells; 1,800 water and wastewater pumping stations; 1,100 treated water storage facilities; and 75 dams. In addition, it offers water and wastewater services to 14 states serving approximately 3.5 million active customers. The company serves residential customers; commercial customers, including food and beverage providers, commercial property developers and proprietors, and energy suppliers; fire service and private fire customers; industrial customers, such as large-scale manufacturers, mining, and production operations; public authorities comprising government buildings and other public sector facilities, such as schools and universities; and other utilities and community water and wastewater systems. American Water Works Company, Inc. was founded in 1886 and is headquartered in Camden, New Jersey.
Historical performance
Stock information
- Market capitalization: $25561188352
- P/E ratio: 23.0228
- PEG ratio: 2.6377
- Dividend yield: 0.0245%
Get more detailed information and learn how to buy AWK.US stock
Company summary
Atmos Energy Corporation, together with its subsidiaries, engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through two segments, Distribution, and Pipeline and Storage. The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3.4 million residential, commercial, public authority, and industrial customers; and owned 76,000 miles of underground distribution and transmission mains. The Pipeline and Storage segment engages in the pipeline and storage operations. This segment transports natural gas for third parties and manages five underground storage facilities in Texas; provides ancillary services customary to the pipeline industry, including parking arrangements, lending, and inventory sales; and owned 5,700 miles of gas transmission lines. Atmos Energy Corporation was founded in 1906 and is based in Dallas, Texas.
Historical performance
Stock information
- Market capitalization: $28517855232
- P/E ratio: 23.6421
- PEG ratio: 2.1682
- Dividend yield: 0.0198%
Get more detailed information and learn how to buy ATO.US stock
Company summary
Consolidated Edison, Inc., through its subsidiaries, engages in the regulated electric, gas, and steam delivery businesses in the United States. The company offers electric services to approximately 3.7 million customers in New York City and Westchester County; gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens, and Westchester County; and steam to approximately 1,520 customers in parts of Manhattan. It also supplies electricity to approximately 0.3 million customers in southeastern New York and northern New Jersey; and gas to approximately 0.1 million customers in southeastern New York. In addition, the company operates 549 circuit miles of transmission lines; 15 transmission substations; 64 distribution substations; 90,755 in-service line transformers; 3,877 pole miles of overhead distribution lines; and 2,405 miles of underground distribution lines, as well as 4,384 miles of mains and 379,888 service lines for natural gas distribution. Further, it invests in electric and gas transmission projects. The company primarily sells electricity to industrial, commercial, residential, and government customers. Consolidated Edison, Inc. was founded in 1823 and is based in New York, New York.
Historical performance
Stock information
- Market capitalization: $36223500288
- P/E ratio: 17.5455
- PEG ratio: 3.3453
- Dividend yield: 0.0338%
Get more detailed information and learn how to buy ED.US stock
Company summary
Dominion Energy, Inc. provides regulated electricity and natural gas services in the United States. It operates through Dominion Energy Virginia, Dominion Energy South Carolina, and Contracted Energy segments. The Dominion Energy Virginia segment engages in the generation, distribution, and transmission of electricity to approximately 2.8 million residential, commercial, industrial, and governmental customers in Virginia and North Carolina. The Dominion Energy South Carolina segment generates, transmits, and distributes electricity to approximately 0.8 million customers in the central, southern, and southwestern portions of South Carolina; and distributes natural gas to approximately 0.5 million residential, commercial, and industrial customers in South Carolina. The Contracted Energy segment is involved in the nonregulated long-term contracted renewable electric generation fleet and renewable natural gas facility. As of December 31, 2024, the company's portfolio of assets included approximately 30.3 GW of electric generating capacity, 10,600 miles of electric transmission lines, and 79,700 miles of electric distribution lines. The company was formerly known as Dominion Resources, Inc. Dominion Energy, Inc. was incorporated in 1983 and is headquartered in Richmond, Virginia.
Historical performance
Stock information
- Market capitalization: $53600137216
- P/E ratio: 20.5131
- PEG ratio: 2.1729
- Dividend yield: 0.0427%
Get more detailed information and learn how to buy D.US stock
Company summary
Essential Utilities, Inc., through its subsidiaries, operates regulated utilities that provide water, wastewater, and natural gas services in the United States. It operates through Regulated Water; and Regulated Natural Gas segments. The company offers water services through operating and maintenance contracts with municipal authorities and other parties. It also provides utility service line protection solutions and repair services to households; and natural gas distribution services. The company serves approximately 5.5 million residential water, commercial water, fire protection, industrial water, wastewater, and other water and utility customers in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, Virginia, and Kentucky under the Aqua and Peoples brands. The company was formerly known as Aqua America, Inc. and changed its name to Essential Utilities, Inc. in February 2020. Essential Utilities, Inc. was founded in 1886 and is headquartered in Bryn Mawr, Pennsylvania.
Historical performance
Stock information
- Market capitalization: $11203001344
- P/E ratio: 16.4958
- PEG ratio: 3.5946
- Dividend yield: 0.0336%
Get more detailed information and learn how to buy WTRG.US stock
Company summary
Exelon Corporation, a utility services holding company, engages in the energy distribution and transmission businesses. The company is involved in the purchase and regulated retail sale of electricity and natural gas; transmission and distribution of electricity; and distribution of natural gas to retail customers. It serves residential, commercial, industrial, governmental, public authorities and electric railroads, and transportation customers. Exelon Corporation was incorporated in 1999 and is headquartered in Chicago, Illinois.
Historical performance
Stock information
- Market capitalization: $47590600704
- P/E ratio: 16.8889
- PEG ratio: 2.1472
- Dividend yield: 0.0339%
Get more detailed information and learn how to buy EXC.US stock
Company summary
FirstEnergy Corp., together with its subsidiaries, engages in the generation, distribution, and transmission of electricity in the United States. It operates through Distribution, Integrated, and Stand-Alone Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 252,244 distribution line miles and 24,143 transmission line miles, including overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.
Historical performance
Stock information
- Market capitalization: $26821011456
- P/E ratio: 20.187
- PEG ratio: 1.2157
- Dividend yield: 0.0365%
Get more detailed information and learn how to buy FE.US stock
Company summary
NRG Energy, Inc., together with its subsidiaries, operates as an energy and home services company in the United States and Canada. It operates through Texas; East; West/Services/Other; Vivint Smart Home; and Corporate Activities segments. The company produces and sells electricity generated using coal, oil, solar, and battery storage; natural gas; and a cloud-based home platform, including hardware, software, sales, installation, customer service, technical support, and professional monitoring solutions. It offers retail electricity and energy management, line and surge protection products, HVAC installation, repair and maintenance, home protection products, repair and maintenance, and carbon offsets; retail services comprising demand response, commodity sales, energy efficiency, and energy management solutions; and system power, distributed generation, renewable and low-carbon products, carbon management and specialty services, backup generation, storage and distributed solar, and energy advisory services. In addition, the company trades in power, natural gas, and related commodities; environmental products; weather products; and financial products, including forwards, futures, options, and swaps. It offers its products and services under the NRG, Reliant, Direct Energy, Green Mountain Energy, and Vivint. It serves residential, commercial, government, industrial, and wholesale customers. NRG Energy, Inc. was founded in 1989 and is headquartered in Houston, Texas.
Historical performance
Stock information
- Market capitalization: $32043747328
- P/E ratio: 24.7623
- PEG ratio: 1.2835
- Dividend yield: 0.0104%
Get more detailed information and learn how to buy NRG.US stock
Company summary
Pacific Gas and Electric Company generates, transmits, distributes, and sells electricity to residential, commercial, industrial, agricultural, and public street and highway lighting customers in northern and southern California. The company also engages in the sale of natural gas to core customers, such as small commercial and residential customers; and non-core customers, such as industrial, large commercial, and natural gas-fired electric generation facilities. It generates electricity using renewable, nuclear, hydroelectric, fossil fuel-fired, and photovoltaic sources. The company was incorporated in 1905 and is based in Oakland, California. Pacific Gas and Electric Company operates as a subsidiary of PG&E Corporation.
Historical performance
Stock information
- Market capitalization: $5855906304
- P/E ratio: 12.2783
- Dividend yield: 0%
Company summary
The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The company develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; distributes natural gas in Illinois, Georgia, Virginia, and Tennessee; operates, constructs, and maintains approximately 78,500 miles of natural gas pipelines and 14 storage facilities; and provides gas marketing services, as well as electric services to retail customers. It also offers distributed energy and resilience solutions, and digital wireless communications and fiber optics services, as well as deploys microgrids for commercial, industrial, governmental, utility customers. The Southern Company was incorporated in 1946 and is headquartered in Atlanta, Georgia.
Historical performance
Stock information
- Market capitalization: $98009350144
- P/E ratio: 22.1418
- PEG ratio: 4.1539
- Dividend yield: 0.032%
Get more detailed information and learn how to buy SO.US stock
Company summary
WEC Energy Group, Inc., through its subsidiaries, provides regulated natural gas and electricity, and renewable and nonregulated renewable energy services in the United States. It operates through Wisconsin, Illinois, Other States, Electric Transmission, and Non-Utility Energy Infrastructure segments. The company generates and distributes electricity from coal, natural gas, oil, and nuclear, as well as renewable energy resources, including wind, solar, hydroelectric, and biomass; and distributes and transports natural gas. It also owns, maintains, monitors, and operates electric transmission systems; and generates, distributes, and sells steam. As of December 31, 2024, the company operated approximately 35,300 miles of overhead distribution lines and 37,100 miles of underground distribution cables, as well as 420 electric distribution substations and 640,100 line transformers; approximately 47,000 miles of natural gas distribution mains; 1,300 miles of natural gas transmission mains; 2.4 million natural gas lateral services; 510 natural gas distribution and transmission gate stations; and 67.0 billion cubic feet of working gas capacities in underground natural gas storage fields. The company was formerly known as Wisconsin Energy Corporation and changed its name to WEC Energy Group, Inc. in June 2015. WEC Energy Group, Inc. was founded in 1896 and is headquartered in Milwaukee, Wisconsin.
Historical performance
Stock information
- Market capitalization: $35567669248
- P/E ratio: 20.7083
- PEG ratio: 2.4133
- Dividend yield: 0.0313%
Get more detailed information and learn how to buy WEC.US stock

What ETFs track the utilities sector?

Major utilities-tracking ETFs include:

Fidelity MSCI Utilities Index ETF (FUTY)
First Trust EIP Carbon Impact ETF (ECLN)
First Trust Utilities AlphaDEX Fund (FXU)
Invesco DWA Utilities Momentum ETF (PUI)
Invesco S&P 500 Equal Weight Utilities ETF (RYU)
iShares Global Utilities ETF (JXI)

iShares U.S. Utilities ETF (IDU)
John Hancock Multi-Factor Utilities ETF (JHMU)
Reaves Utilities ETF (UTES)
Utilities Select Sector SPDR Fund (XLU)
Vanguard Utilities ETF (VPU)

Why invest in the utilities sector?

One of the major draws to the utilities sector is stability. Companies in this sector typically pay steady dividends investors can rely on. The utilities sector is one of the least volatile on the market and is especially well-positioned to weather recession. Gas, water and electric companies tend to do well during economic downturn, so stocks in this sector are a prudent choice for investors executing a long-term buy and hold strategy.

What unique risks does the utilities sector face?

Due to the government regulations that hold significant sway over this sector, it’s difficult for utilities providers to increase their revenue through raised rates. And due to the sizable infrastructure required to operate, utilities providers are often forced to carry a lot of debt, making them especially vulnerable to interest rate fluctuations.
Profits from investing in the utilities sector can act as a reliable source of income, but investors seeking opportunities with greater growth potential would do better to explore other sectors, like technology stocks.

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Bottom line

The utilities sector houses companies responsible for basic services we need and rely on, including gas, water and electricity. Reliance on these staple services makes companies in this sector a safe and stable investment, but heavy regulations limit their revenue potential.

Review the best brokerage accounts for the account best suited to your investment goals.

Frequently asked questions

How do I find utilities stocks?

Third-party research providers like Bloomberg and Yahoo Finance offer sector-specific analytics you can use to stay up-to-date on sector price fluctuations. Most trading platforms also offer stock screeners you can use to filter available stocks by sector.

What is an independent power producer?

An independent power producer is a company that specializes in the generation and distribution of electric power to public utilities or consumers.

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Shannon Terrell

Editor

Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga. See full bio

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Investing in Utilities Stocks

This heavily regulated sector is fairly low risk — but growth is limited.

What are utilities stocks?

What subcategories does it include?

How to invest in the utilities sector

What stocks are in the utilities sector?

The AES Corporation (AES.US)

American Water Works (AWK.US)

Atmos Energy Corporation (ATO.US)

Consolidated Edison (ED.US)

Dominion Energy (D.US)

Essential Utilities (WTRG.US)

Exelon Corporation (EXC.US)

FirstEnergy Corporation (FE.US)

NRG Energy (NRG.US)

Pacific Gas and Electric Company (PCG-PA.US)

Southern Company (SO.US)

WEC Energy Group (WEC.US)