Power Up Your Portfolio: Three Utility Stocks Positioned for Growth in 2025

The electricity sector is experiencing a pivotal transformation. Across North America, from Canada to California, power companies are modernizing infrastructure while expanding generation capacity to meet surging demand driven by artificial intelligence data centers and traditional commercial growth. For investors seeking stable, dividend-paying investments with genuine growth catalysts, the timing appears favorable.

Why Now? Three Structural Tailwinds

The Interest Rate Environment Has Shifted Decisively

Capital-intensive utility businesses live and die by borrowing costs. After the Federal Reserve pushed rates to 5.25-5.50%, the industry faced genuine headwinds. That narrative has reversed entirely. The central bank has cut rates by 100 basis points, bringing benchmarks down to 4.25-4.50%, with additional cuts anticipated through the second half of 2025. This matters enormously: utilities planning $50+ billion infrastructure programs now face significantly lower financing costs. Every percentage point reduction translates directly to improved margins and cash flow available for dividend growth.

Electricity Demand Is Not a Forecast—It’s Happening Now

The U.S. Energy Information Administration projects electricity generation will climb 2.2% in 2025 and another 2.3% in 2026, reaching 4,340 billion kilowatt-hours. This isn’t speculative. AI training and inference operations consume 10-15 times more power than conventional data center workloads. Microsoft, Google, and others are building massive facilities across multiple regions, creating unprecedented demand concentration. Beyond technology, industrial and commercial sectors are increasing consumption at healthy rates. Simultaneously, electricity prices are rising: industrial customers face 3.4% price increases, commercial sectors 3.96%, and residential 3.88%, with similar trends expected through 2026. Higher volumes plus rising rates equal expanding revenues for the operators.

Renewable Energy Transition Is Accelerating, Not Slowing

Renewable sources will comprise 25% of U.S. electricity generation in 2025, climbing to 26% in 2026, driven by continuous solar and wind capacity additions. The Inflation Reduction Act removed the policy uncertainty that previously plagued long-term planning. Utilities can now commit to multi-year capital programs with confidence that federal incentives will remain in place. This creates predictable earnings visibility—exactly what equity markets reward.

Three Operators Worth Accumulating

CenterPoint Energy (CNP)

This Houston-based operator manages transmission, distribution, and competitive sales across multiple states. The company is deploying $53 billion over the next decade to expand operations and upgrade aging infrastructure. Consensus estimates forecast 8.02% earnings growth in 2025 and 7.43% in 2026. The dividend yield of 2.3% exceeds the S&P 500, and the long-term earnings growth trajectory sits at 7.8%—compelling for a mature, regulated utility.

Fortis Inc. (FTS)

Operating across Canada, the United States, and Caribbean markets, Fortis represents geographic diversification within the North American power sector. The company plans $26 billion in investments through 2029, emphasizing regulated electric and gas operations. Expected earnings growth of 4.18% (2025) and 4.02% (2026) may appear modest until you consider the dividend yield of 3.53%—among the highest in the space. Long-term earnings growth is pegged at 5.13%.

NiSource Inc. (NI)

This Merrillville-based energy holding company provides gas and electricity across numerous U.S. markets. NiSource is committing $19.4 billion for infrastructure through 2029. Consensus estimates project 7.43% earnings growth in 2025 and 7.87% in 2026, with long-term growth at 7.88%. The 2.58% dividend yield reflects the company’s commitment to returning cash to shareholders while funding expansion.

The Industry Backdrop: Why Utilities Matter Now

The broader utility sector spans generation, transmission, distribution, and retail operations. Demand typically remains resilient across economic cycles, with weather extremes driving consumption spikes during unusual heat or cold periods. The industry currently ranks #86 in the Zacks Industry classification system, placing it in the top 35% of rated industries—a positioning reflecting improving earnings outlooks.

Performance metrics validate the narrative. Over the past 12 months, the electric power industry gained 16.9%, outpacing its broader sector’s 14.2% return, though trailing the S&P 500’s 22.7%. On valuation, the industry trades at 14.37X EV/EBITDA (TTM), below both the S&P 500 at 17.02X and the utilities sector at 15.75X. Historical trading ranges show the industry has oscillated between 11.96X and 21.19X, with a five-year median of 15.32X—suggesting current valuations offer reasonable entry points.

All three recommended stocks carry Zacks Rank #2 (Buy) designations and maintain market capitalizations exceeding $20 billion, providing the institutional-grade quality and liquidity serious investors require. For those seeking exposure to secular growth tailwinds (AI infrastructure, renewable transition) combined with near-term catalysts (rate cuts, pricing power), the electric power sector warrants portfolio consideration.