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Investing in utilities stocks

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

Shannon Terrell

Updated

Feb 11, 2021

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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 operates as a diversified power generation and utility company. It owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. The company also 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 a range of fuels and technologies to generate electricity, including coal, gas, hydro, wind, solar, and biomass; and renewables, such as energy storage and landfill gas. The company owns and/or operates a generation portfolio of approximately 32,326 megawatts. It has operations in the United States, Puerto Rico, El Salvador, Chile, Colombia, Argentina, Brazil, Mexico, Central America, the Caribbean, Europe, and Asia. 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: $12039928832
- PEG ratio: 1.3829
- Dividend yield: 0.0369%
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 to approximately 1,600 communities in 14 states serving approximately 3.4 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. It also provides water and wastewater services on various military installations; and undertakes contracts with municipal customers, primarily to operate and manage water and wastewater facilities, as well as offers other related services. In addition, the company operates approximately 80 surface water treatment plants; 490 groundwater treatment plants; 175 wastewater treatment plants; 53,500 miles of transmission, distribution, and collection mains and pipes; 1,100 groundwater wells; 1,700 water and wastewater pumping stations; 1,100 treated water storage facilities; and 73 dams. It serves approximately 14 million people with drinking water, wastewater, and other related services in 24 states. The company was founded in 1886 and is headquartered in Camden, New Jersey.
Historical performance
Stock information
- Market capitalization: $25923022848
- P/E ratio: 27.4515
- PEG ratio: 3.4055
- Dividend yield: 0.0213%
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 3.3 million residential, commercial, public authority, and industrial customers; and owned 73,689 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 5,645 miles of gas transmission lines. Atmos Energy Corporation was founded in 1906 and is headquartered in Dallas, Texas.
Historical performance
Stock information
- Market capitalization: $17065159680
- P/E ratio: 18.8393
- PEG ratio: 2.4068
- Dividend yield: 0.028%
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. It offers electric services to approximately 3.6 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 1,530 customers in parts of Manhattan. The company 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, it operates 543 circuit miles of transmission lines; 15 transmission substations; 63 distribution substations; 87,951 in-service line transformers; 3,869 pole miles of overhead distribution lines; and 2,320 miles of underground distribution lines, as well as 4,359 miles of mains and 377,741 service lines for natural gas distribution. Further, the company owns, develops, and operates renewable and energy infrastructure projects; and provides energy-related products and services to wholesale and retail customers, as well as invests in electric and gas transmission projects. It 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: $31756787712
- P/E ratio: 13.5879
- PEG ratio: 2.6846
- Dividend yield: 0.0352%
Get more detailed information and learn how to buy ED.US stock
Company summary
Dominion Energy, Inc. produces and distributes energy in the United States. It operates through four segments: Dominion Energy Virginia, Gas Distribution, Dominion Energy South Carolina, and Contracted Assets. The Dominion Energy Virginia segment generates, transmits, and distributes regulated electricity to approximately 2.7 million residential, commercial, industrial, and governmental customers in Virginia and North Carolina. The Gas Distribution segment is involved in the regulated natural gas sales, transportation, gathering, storage, and distribution operations in Ohio, North Carolina, Utah, southwestern Wyoming, and southeastern Idaho that serve approximately 3.0 million residential, commercial and industrial customers. It also has nonregulated renewable natural gas facilities in operation. The Dominion Energy South Carolina segment generates, transmits, and distributes electricity to approximately 782,000 customers in the central, southern, and southwestern portions of South Carolina; and distributes natural gas to approximately 435,000 residential, commercial, and industrial customers in South Carolina. The Contracted Assets segment is involved in the nonregulated long-term contracted renewable electric generation and solar generation facility development operations; and gas transportation, LNG import, and storage operations, as well as in the liquefaction facility. As of December 31, 2022, the company's portfolio of assets included approximately 31.0 gigawatt of electric generating capacity; 10,600 miles of electric transmission lines; 78,500 miles of electric distribution lines; and 93,500 miles of gas distribution mains and related service facilities. 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: $39053316096
- P/E ratio: 15.505
- PEG ratio: 2.3105
- Dividend yield: 0.0572%
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, or natural gas services in the United States. The company operates through Regulated Water and Regulated Natural Gas segments. It offers water services through operating and maintenance contract with municipal authorities and other parties. The company also provides non-utility raw water supply services for firms in the natural gas drilling industry; and water and sewer line protection solutions, and repair services to households. It serves approximately 8.8 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, West 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: $9855830016
- P/E ratio: 20.0444
- PEG ratio: 2.8739
- Dividend yield: 0.0339%
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 in the United States and Canada. 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 also offers support services, including legal, human resources, information technology, supply management, financial, engineering, customer operations, distribution and transmission planning, asset management, system operations, and power procurement services. It serves distribution utilities, municipalities, cooperatives, and financial institutions, as well as commercial, industrial, governmental, and residential customers. Exelon Corporation was incorporated in 1999 and is headquartered in Chicago, Illinois.
Historical performance
Stock information
- Market capitalization: $38553272320
- P/E ratio: 18.014
- PEG ratio: 2.3093
- Dividend yield: 0.0369%
Get more detailed information and learn how to buy EXC.US stock
Company summary
FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 24,080 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 274,518 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves approximately 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.
Historical performance
Stock information
- Market capitalization: $21328701440
- P/E ratio: 39.1263
- PEG ratio: 2.4426
- Dividend yield: 0.0441%
Get more detailed information and learn how to buy FE.US stock
Company summary
NRG Energy, Inc., together with its subsidiaries, operates as an integrated power company in the United States. It operates through Texas, East, and West segments. The company is involved in producing and selling electricity and related products and services to approximately residential, commercial, industrial, and wholesale customers. It generates electricity using natural gas, coal, oil, solar, nuclear, and battery storage. The company also provides system power, distributed generation, renewable products, backup generation, storage and distributed solar, demand response, and energy efficiency and advisory services, as well as carbon management and specialty services. In addition, it trades in electric power, natural gas, and related commodities; environmental products; weather products; and financial products, including forwards, futures, options, and swaps. Further, the company procures fuels; and sells energy, services, and products and services under the NRG, Reliant, Direct Energy, Green Mountain Energy, Stream, and XOOM Energy. NRG Energy, Inc. was founded in 1989 and is headquartered in Houston, Texas.
Historical performance
Stock information
- Market capitalization: $10854733824
- PEG ratio: 3.2621
- Dividend yield: 0.0312%
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 and natural gas to customers in northern and central California, the United States. It generates electricity using nuclear, hydroelectric, fossil fuel-fired, and photovoltaic sources. It serves residential, commercial, industrial, and agricultural customers, as well as natural gas-fired electric generation facilities. 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: $5316581376
- P/E ratio: 11.1475
- Dividend yield: 0.0737%
Company summary
The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates through three segments: Gas Distribution Operations, Gas Pipeline Investments, and Gas Marketing Services. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, gas distribution operations, and gas pipeline investments operations. In addition, it constructs, operates, and maintains 77,591 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers. It serves approximately 8.8 million electric and gas utility customers. Further, the company offers digital wireless communications and fiber optics services. The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia.
Historical performance
Stock information
- Market capitalization: $77739393024
- P/E ratio: 26.0146
- PEG ratio: 2.6787
- Dividend yield: 0.0389%
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. The company operates through six segments: Wisconsin, Illinois, Other States, Electric Transmission, Non-Utility Energy Infrastructure, and Corporate and Other. It generates and distributes electricity from coal, natural gas, and oil, as well as hydroelectric, wind, solar, and biomass sources; provides electric transmission services; offers retail natural gas distribution services; transports natural gas; and generates, distributes, and sells steam. As of December 31, 2022, it operated approximately 35,600 miles of overhead distribution lines and 36,100 miles of underground distribution cables, as well as 430 electric distribution substations and 514,800 line transformers; 52,000 miles of natural gas distribution mains; 1,100 miles of natural gas transmission mains; 2.4 million natural gas lateral services; 500 natural gas distribution and transmission gate stations; and 68.2 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: $26811975680
- P/E ratio: 19.6759
- PEG ratio: 2.6488
- Dividend yield: 0.0367%
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)

How is the utilities sector performing?

The graph below tracks the Utilities Select Sector SPDR Fund ETF (XLU). Tracking ETF performance is one way to gauge how a sector is performing.

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 your brokerage account options across multiple trading platforms for the account best suited to your investment goals.

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Finder is not an adviser or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.

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Shannon Terrell

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.

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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)

What ETFs track the utilities sector?

How is the utilities sector performing?

Why invest in the utilities sector?

What unique risks does the utilities sector face?

Compare stock trading platforms

Bottom line

Frequently asked questions

How do I find utilities stocks?

What is an independent power producer?

Shannon Terrell

More guides on Finder

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