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About the Industry
The Utility – Electric Power industry encompasses the generation, transmission, distribution, storage and retail of electricity to consumers. Typically, demand for utility services remains stable across economic cycles, with exceptions arising from unusual weather patterns. Periods of extreme heat or cold tend to push electricity consumption higher. The industry is undergoing a notable transformation, with a growing number of companies committing to zero-emission objectives. The rapid increase in global Internet usage and the projected rise of artificial intelligence (“AI”) are expected to significantly boost electricity demand, as AI processes require far more power than conventional online activities like music streaming or photo browsing. A decline in interest rates is also a favorable development for this capital-intensive industry.
3 Trends Shaping the Future of the Electric Power Industry
Decline in Interest Rate Is a Tailwind: To fund maintenance, upgrades and expansion efforts, utility companies often turn to capital markets for financing. The Federal Reserve’s series of rate hikes had raised the benchmark interest rate to the 5.25-5.50% range, creating headwinds for the industry. However, the Fed has since shifted its stance, cutting rates gradually and bringing the benchmark down to 3.75-4.00%. This policy reversal is a positive development for capital-intensive, domestically oriented utilities, as lower borrowing costs help alleviate financial strain. The rate decline is particularly advantageous for companies planning substantial infrastructure investments. Additional rate cuts are anticipated and expected to further benefit utility operators.
Utilities Shift Toward Cleaner Power Generation: U.S. electric power operators are steadily transitioning toward cleaner energy sources. According to the U.S. Energy Information Administration (“EIA”), the share of U.S. electricity generation from renewables is projected to increase from 23% in 2024 to 24% in 2025 and reach 26% in 2026, driven by continued growth in solar and wind capacity. The Inflation Reduction Act is expected to further accelerate this shift by eliminating uncertainties around federal renewable energy incentives. By providing long-term, predictable support for a broad range of low-cost clean energy solutions, the act enhances earnings visibility and strengthens the utilities’ pathway toward decarbonization.
Increasing Consumption and Prices for Electricity: Per the EIA, consumption of electricity is expected to increase in the United States. The consumption is expected to increase 2.5% in 2025 from 2024 levels and further increase 2.7% in 2026. The development of AI-based large data centers in the United States, the reshoring of some industries, higher electric vehicle adoption and increasing residential demand are also increasing the electricity demand. Per EIA, the price of average electricity to be provided to customers in the industrial, commercial and residential sectors will increase 4.7%, 4.2% and 4.6%, respectively. The same trend is expected to continue in 2026 as well, boosting revenues of the companies operating in this space.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The 57-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #57, which places it in the top 24% of more than 243 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks Rank industries is a result of a positive earnings outlook for the constituent companies in aggregate. The industry’s recent earnings estimate of $2.64 as of Oct. 31, 2025, reflects year-over-year growth of 3.9%.
Before we present a few Utility - Electric Power stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and current valuation.
Electric Power Industry Lags S&P 500 But Beats Sector
The Utility Electric Power industry has lagged the Zacks S&P 500 but outperformed its own sector over the past 12 months. The industry has gained 15.6% compared with its sector’s 14% rally. The Zacks S&P 500 composite has gained 22.3% in the same period.
Electric Power Industry''s Current Valuation
On the basis of EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) TTM, which is a commonly used multiple for valuing Utility Electric Power companies, the industry is trading at 13.91X compared with the S&P 500’s 19.07X and the Utility sector’s 15.25X.
Over the past five years, the industry has traded as high as 21.22X, as low as 12.34X and at the median of 15.35X.
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4 Electric Power Industry Stocks to Buy
Utilities is a mature sector and all the stocks selected from the Zacks Utility Electric Power industry have a market capitalization of nearly $25 billion. The stocks currently have a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Duke Energy: Charlotte, NC-based Duke Energy is a premier utility service provider offering efficient power and energy services. Duke Energy has been making strong progress in reducing carbon emissions from electricity generation. As of Dec. 31, 2024, Duke Energy successfully reduced carbon emissions by 44% from 2005 levels.
The company’s long-term (three to five years) earnings growth is pegged at 6.43%. DUK’s current dividend yield is 3.3%, better than the S&P 500’s yield of 1.47%. The Zacks Consensus Estimate for Duke Energy’s 2025 and 2026 earnings indicates year-over-year growth of 7.29% and 6.08%, respectively.
Dominion Energy: Richmond, VA-based Dominion Energy, together with its subsidiaries, produces and transports energy in the United States. The company currently expects to invest $50 billion in the 2025-2029 time period to strengthen its infrastructure to provide efficient services to the expanding customer base.
Dominion Energy’s long-term earnings growth is pegged at 8.13%. D’s current dividend yield is 4.5%. The Zacks Consensus Estimate for Dominion Energy’s 2025 and 2026 earnings implies year-over-year growth of 22.74% and 5.63%, respectively.
Entergy Corporation: New Orleans, LA-based Entergy Corporation is primarily engaged in electric power production and retail distribution of power. The company currently expects to invest $41 billion in the 2026-2029 time period to strengthen its operations. Entergy Corporation is adding more clean assets to its generation portfolio. As of September 2025, the company has approximately 10,000 megawatts of clean energy projects that are either operational or in approval status, awaiting construction.
The company’s long-term earnings growth is pegged at 10.21%. ETR’s current dividend yield is 2.5%. The Zacks Consensus Estimate for Entergy Corporation’s 2025 and 2026 earnings indicates year-over-year growth of 6.85% and 12.63%, respectively.
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CenterPoint Energy: Houston, TX-based CenterPoint Energy provides electric transmission & distribution, natural gas distribution and competitive natural gas sales and services operations. CenterPoint Energy is investing to expand its operations to meet increasing electricity demand, backed by expanding commercial activity. In the next 10 years, the company plans to invest $53 billion to strengthen and expand its operations further.
The company’s long-term earnings growth is pegged at 7.9%. CNP’s current dividend yield is 2.3%, better than the S&P 500’s yield of 1.51%. The Zacks Consensus Estimate for CenterPoint Energy’s 2025 and 2026 earnings implies year-over-year growth of 8.64% and 8.43%, respectively.
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This article originally published on Zacks Investment Research (zacks.com).
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