Best dividend utility stocks to invest in 2026

Dividend-paying utility stocks deliver dependable income supported by regulated cash flows, essential services, and predictable earnings from long-term rate structures. They also provide defensive performance across economic cycles, often exhibiting lower volatility and resilient dividend coverage that appeals to income-focused portfolios.

NRG Energy generates and sells electricity nationwide through a diversified fleet and customer-centric retail platform. Capital Power develops, acquires, and operates generation assets while accelerating investment in low-carbon and renewable projects. Otter Tail serves Upper Midwest communities with reliable electric utility operations and a complementary manufacturing segment.

Together with Southern Company, these names stand out among dividend utility leaders. They pair stable cash returns with long-term resilience worth considering in 2025.

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Before we dive into each company, let`s take a look at how your investment would have performed if you had invested in stocks mentioned in this article.

Now, let`s take a closer look at each of the companies:

  • Constellation Energy (NYSE:CEG)

    Constellation Energy is a leading energy company specializing in power generation, competitive energy supply, and comprehensive sustainability solutions across multiple markets. Founded in 2022 and headquartered in Baltimore, Maryland, the company was formed as a spin-off from Exelon Corporation to focus on clean energy generation. With a strong portfolio of nuclear, wind, solar, and hydroelectric assets, Constellation is one of the largest providers of clean energy in the United States.

    The company`s operations span electricity generation, wholesale and retail energy supply, and comprehensive energy efficiency solutions for businesses and consumers nationwide. As a key player in the transition to a low-carbon future, Constellation is committed to reducing emissions and expanding its renewable energy footprint. Through innovation and strategic investments, the company aims to provide reliable, affordable, and sustainable energy solutions to its customers nationwide.

    Constellation Energy financial statements

    Analysts recommendation: 1.65

    Financial Health

    • Return on assets (ROA): 3.88%
    • Return on equity (ROE): 19.84%
    • Return on investment (ROI): 12.67%

    Profitability

    • Gross margin: 20.13%
    • Operating margin: 16.33%
    • Net profit margin: 11.03%

    Growth

    • EPS (past 5 years): 28.15%
    • EPS (current): 8.74
    • EPS estimate (next quarter): 2.27
    • EPS growth (this year): -22.3%
    • EPS growth (next year): 23.5%
    • EPS growth (next 5 years): 15.58%
    • EPS growth (quarter-over-quarter): -22.25%
    • Sales growth (past 5 years): 4.5%
    • Sales growth (quarter-over-quarter): 0.3%

    💡 Why invest in Constellation Energy?

    Several key factors make Constellation an intriguing prospect for investors seeking exposure to the evolving energy landscape:

    • Clean Energy Leadership: Constellation operates as one of the largest clean energy producers in the United States, maintaining a diverse portfolio of nuclear, renewable, and natural gas generation assets nationwide with market leadership.
    • Diversified Business Model: From generation and wholesale electricity sales to retail providers and clean energy solutions, Constellation`s diversified approach mitigates risk and capitalizes on various energy market segments effectively.
    • Customer Solutions Focus: Beyond selling electricity, Constellation offers comprehensive energy management tools and services to help customers optimize energy use, fostering loyalty and creating recurring revenue streams with value-added services.
    • Robust Financial Performance: Constellation demonstrates consistent revenue growth and profitability with strong cash flow generation, effectively navigating the dynamic energy market while supporting dividend payments and shareholder returns.

    🐌 Key considerations before investing in Constellation Energy

    Like navigating complex market conditions, 80 faces headwinds requiring careful consideration from investors strategically:

    • Regulatory Policy Shifts: The energy sector faces heavy regulation, and changes in government policies concerning emissions standards or renewable energy subsidies can impact Constellation`s business model and profitability significantly.
    • Volatile Commodity Prices: The cost of natural gas and other energy sources can fluctuate significantly, impacting Constellation`s generation costs and potentially squeezing profit margins while affecting overall revenue predictability.
    • Market Competition Intensity: The energy sector represents a highly competitive landscape, with established players and new entrants vying for market share, requiring continuous innovation and competitive advantages to maintain market position.
    • Nuclear Operational Risks: Nuclear power provides significant clean energy but involves inherent safety, regulatory, and operational risks including potential accidents and high decommissioning costs that impact long-term operations.

    Final thoughts on Constellation Energy

    Constellation Energy Corp`s position as the nation`s largest clean energy producer, diversified business model, and solid financial performance create compelling investment opportunities. However, the ever-present influence of regulations, volatile commodity prices, and competitive pressures necessitate careful consideration of potential risks and market dynamics. Like a lighthouse guiding ships through turbulent waters, Constellation`s nuclear expertise and diverse energy portfolio provide stability and direction in the rapidly changing energy landscape.

  • NRG Energy (NYSE:NRG)

    NRG Energy is a leading American energy company specializing in comprehensive power generation and retail electricity services across multiple markets. Founded in 1989 and headquartered in Houston, Texas, the company has built extensive operational capabilities and customer-facing platforms that support scale. Over the years, NRG has expanded its operations through acquisitions and innovations, becoming a key player in the U.S. energy sector.

    NRG Energy`s core business focuses on generating and selling electricity to residential, commercial, and industrial customers across the United States nationwide. The company operates a diverse portfolio of power plants, including natural gas, coal, nuclear, wind, and solar facilities for comprehensive energy generation. In addition to energy production, NRG is a major provider of retail electricity, offering customized energy plans and sustainable energy options to consumers.

    NRG Energy financial statements

    Analysts recommendation: 1.94

    Financial Health

    • Return on assets (ROA): 6.81%
    • Return on equity (ROE): 64.19%
    • Return on investment (ROI): 10.36%

    Profitability

    • Gross margin: 21.75%
    • Operating margin: 5.53%
    • Net profit margin: 4.84%

    Growth

    • EPS (past 5 years): -20.43%
    • EPS (current): 6.69
    • EPS estimate (next quarter): 1.05
    • EPS growth (this year): 14.96%
    • EPS growth (next year): 17.96%
    • EPS growth (next 5 years): 16.66%
    • EPS growth (quarter-over-quarter): 118.28%
    • Sales growth (past 5 years): 23.73%
    • Sales growth (quarter-over-quarter): 5.7%

    💡 Why invest in NRG Energy?

    NRG Energy offers compelling strengths for investors seeking exposure to its market sector and long-term growth potential:

    • Essential Service Provider: Electricity represents a fundamental human need, making NRG`s services recession-resistant and consistently in high demand across residential, commercial, and industrial customer segments nationwide with stability.
    • Sustainability Focus Initiative: NRG recognizes the growing importance of clean energy and actively invests in renewable sources like wind and solar power, strategically aligning with global sustainability goals and regulatory trends.
    • Balanced Generation Mix: The company maintains a balanced mix of natural gas, coal, nuclear, and renewable energy sources, effectively hedging against fluctuations in any single fuel source while ensuring reliable power generation capacity.
    • Strong Geographic Coverage: NRG operates across multiple states throughout the United States, effectively mitigating risks associated with regional energy market fluctuations and providing diverse revenue streams from various markets.

    🐌 Key considerations before investing in NRG Energy

    Like navigating complex market conditions, NRG Energy faces significant headwinds requiring careful consideration from investors:

    • Regulatory Environment Risks: The energy sector faces heavy regulation, and changes in environmental regulations can significantly impact NRG`s operations and profitability, particularly regarding their reliance on traditional fossil fuels.
    • Industry Competition Pressures: The energy market includes numerous established players and new entrants in the renewable space, requiring NRG to continuously maintain their competitive edge and secure new customers effectively and strategically.
    • Fuel Price Volatility: NRG`s profitability experiences significant impact from price swings in natural gas, coal, and other fossil fuels, creating uncertainty in operational costs and margin predictability for long-term investors consistently.
    • Energy Transition Challenges: The rapid growth of renewable energy sources could disrupt the traditional energy market model, potentially requiring substantial strategic adjustments to NRG`s long-term business operations and investments.

    Final thoughts on NRG Energy

    NRG`s strong market position, sustainability focus, and diversified generation portfolio create compelling opportunities for long-term investors seeking exposure to the evolving energy sector. However, regulatory challenges, competitive pressures, and fuel cost volatility require careful evaluation of potential risks and dynamic market conditions for investors. Like a power grid balancing multiple energy sources, NRG`s diversified approach provides stability while adapting to the changing energy landscape.

  • Otter Tail (NYSE:OTTR)

    Otter Tail Corporation is a diversified energy and infrastructure company primarily engaged in electric utility operations and comprehensive manufacturing services. Founded in 1907 and headquartered in Fergus Falls, Minnesota, the company serves residential, commercial, and industrial customers across the Upper Midwest. Through its subsidiaries, Otter Tail generates, transmits, and distributes electricity while also operating in various manufacturing and infrastructure-related industries nationwide.

    The company`s electric utility segment focuses on providing reliable and affordable energy, with a strategic mix of renewable and traditional power sources. In addition to its energy operations, Otter Tail has a strong presence in manufacturing, specializing in custom metal components, plastic products, and material handling solutions. By leveraging its diverse business model and strategic investments, Otter Tail continues to deliver consistent growth and long-term value to its shareholders.

    Otter Tail financial statements

    Analysts recommendation: 2.33

    Financial Health

    • Return on assets (ROA): 5.9%
    • Return on equity (ROE): 16.1%
    • Return on investment (ROI): 9.7%

    Profitability

    • Gross margin: 42.97%
    • Operating margin: 29.77%
    • Net profit margin: 21.48%

    Growth

    • EPS (past 5 years): 26.96%
    • EPS (current): 6.62
    • EPS estimate (next quarter): 1.32
    • EPS growth (this year): -8.4%
    • EPS growth (next year): -11.81%
    • EPS growth (next 5 years): -13.42%
    • EPS growth (quarter-over-quarter): -8.53%
    • Sales growth (past 5 years): 7.67%
    • Sales growth (quarter-over-quarter): -3.7%

    💡 Why invest in Otter Tail?

    Otter Tail presents fundamental strengths that position it well for investors seeking stable returns and growth prospects:

    • Renewable Energy Focus: Their expertise lies in harnessing wind power and other renewable energy sources, reducing dependence on fossil fuels and greenhouse gas emissions while supporting clean energy transition initiatives effectively.
    • Reliability Commitment Strength: Despite their focus on renewables, they prioritize providing consistent and reliable power to their customers through diversified generation sources and comprehensive grid infrastructure investments.
    • Regional Market Focus: Otter Tail often serves smaller communities across the Upper Midwest, fostering close customer relationships and understanding the specific energy needs of their diverse customer base effectively and strategically.
    • Grid Modernization Investment: They actively invest in building and maintaining clean energy infrastructure including wind farms and transmission systems, contributing to a more sustainable future and enhanced grid reliability consistently.

    🐌 Key considerations before investing in Otter Tail

    Important considerations before partnering with Otter Tail Corporation include several operational and strategic market factors:

    • Limited Geographic Reach: Their focus on specific Upper Midwest regions might limit their availability and growth opportunities in other geographic markets with different regulatory environments and competitive dynamics significantly.
    • Weather Dependency Challenges: Wind power generation can fluctuate significantly depending on weather conditions and seasonal patterns, requiring backup power sources, grid balancing mechanisms, and operational flexibility consistently.
    • High Initial Costs: Developing and integrating renewable energy infrastructure including wind farms and transmission systems can involve significant upfront capital costs, long payback periods, and complex financing challenges consistently.
    • Regulatory Compliance Burden: Evolving environmental regulations and utility commission requirements can impose additional compliance costs, operational restrictions, and administrative burdens on utility operations and expansion plans.

    Final thoughts on Otter Tail

    Otter Tail`s focus on clean energy, regional development commitment, and diversified business model create compelling opportunities for renewable energy investors. However, limited geographic reach, weather dependence, and significant infrastructure investment costs warrant careful evaluation of regional utility dynamics and strategies. Otter Tail leverages its diversified platform to deliver essential services while navigating the transformation toward sustainable and innovative energy markets.

  • Capital Power (TO:CPX)

    Capital Power Corporation is a North American power producer that develops, acquires, and operates comprehensive electricity generation facilities across multiple markets. Founded in 2009 and headquartered in Edmonton, Alberta, Canada, the company maintains strong focus on sustainability and renewable energy expansion. With a strong focus on sustainability, Capital Power has been expanding its renewable energy portfolio while maintaining a diverse mix of power generation assets.

    The core business of Capital Power revolves around owning and operating a comprehensive fleet of power plants, including natural gas, wind, solar, and coal-fired facilities. The company is actively transitioning towards cleaner energy solutions by investing in low-carbon technologies and comprehensive renewable projects across multiple jurisdictions. Through strategic acquisitions and innovation, Capital Power aims to provide reliable and sustainable electricity while reducing its environmental impact significantly.

    Capital Power financial statements

    Analysts recommendation: 2

    Financial Health

    • Return on assets (ROA): 1.9%
    • Return on equity (ROE): 9.44%
    • Return on investment (ROI): N/A

    Profitability

    • Gross margin: 39.37%
    • Operating margin: 21.97%
    • Net profit margin: 12.24%

    Growth

    • EPS (past 5 years): 0.155%
    • EPS (current): 2.78
    • EPS estimate (next quarter): 0.88
    • EPS growth (this year): -28.8%
    • EPS growth (next year): 0.085%
    • EPS growth (next 5 years): 0.064%
    • EPS growth (quarter-over-quarter): 0.155%
    • Sales growth (past 5 years): 0.139%
    • Sales growth (quarter-over-quarter): 18.2%

    💡 Why invest in Capital Power?

    Capital Power`s strategic positioning and growth initiatives offer several compelling reasons to consider investing in the company:

    • Balanced Generation Portfolio: A balanced mix of renewable and thermal assets including wind, solar, natural gas, and coal facilities mitigates operational risk and enhances revenue stability across different market conditions consistently.
    • Sustainability Leadership Commitment: Clear goals for transitioning to clean energy, including net-zero emissions by 2045, position the company as a leader in the energy transition with strategic renewable investments and market positioning.
    • Attractive Dividend Yield: A strong track record of providing reliable and growing dividends with consistent payout policies appeals to income-focused investors seeking stable utility returns and predictable cash flows consistently.
    • Strategic Expansion Opportunities: Strategic investments in renewable energy projects and strategic acquisitions drive long-term growth potential while expanding geographic presence, generation capacity, and market diversification effectively.

    🐌 Key considerations before investing in Capital Power

    However, investors should carefully consider the challenges and risks facing Capital Power in its competitive landscape:

    • Environmental Regulatory Risks: Evolving energy policies and environmental regulations across multiple jurisdictions could significantly impact the company`s operations, compliance costs, and long-term profitability consistently and substantially.
    • Market Price Fluctuations: Fluctuations in natural gas and electricity prices driven by market dynamics, weather patterns, and supply-demand imbalances may significantly affect financial performance and revenue predictability consistently.
    • Significant Capital Expenditures: Significant investments in growth and sustainability initiatives including renewable projects and infrastructure upgrades may constrain cash flow and dividend growth in the short term substantially.
    • Intensifying Market Competition: Increased competition in the renewable energy sector from established utilities and new entrants could limit market share, pricing power, and long-term profitability growth across key markets consistently.

    Final thoughts on Capital Power

    Capital Power Corporation offers a strong investment case with its diversified portfolio, commitment to sustainability, and attractive dividend yield for income-focused investors. However, regulatory risks, commodity price volatility, and capital-intensive renewable projects warrant careful evaluation of utility sector dynamics and transition costs. Capital Power leverages its diversified generation mix to deliver reliable electricity while navigating the complex transformation toward sustainable clean energy markets.

  • Southern Company (NYSE:SO)

    Southern Company is a leading energy provider specializing in the generation, transmission, and distribution of electricity and natural gas across the United States. Founded in 1945 and headquartered in Atlanta, Georgia, the company serves millions of customers through its subsidiaries, including Georgia Power, Alabama Power, and Mississippi Power. With a strong focus on reliability and sustainability, Southern Company has become one of the largest utility firms in the country.

    Operating a diverse energy portfolio, Southern Company invests in nuclear, natural gas, renewables, and energy storage to ensure long-term energy security. The company has been at the forefront of modernizing the power grid and advancing clean energy technologies, including carbon capture and hydrogen solutions. By balancing innovation with operational excellence, Southern Company continues to play a crucial role in shaping the future of the energy sector.

    Southern Company financial statements

    Analysts recommendation: 2.84

    Financial Health

    • Return on assets (ROA): 3.46%
    • Return on equity (ROE): 11.43%
    • Return on investment (ROI): 4.42%

    Profitability

    • Gross margin: 49.02%
    • Operating margin: 36.56%
    • Net profit margin: 15.42%

    Growth

    • EPS (past 5 years): -2.34%
    • EPS (current): 4.02
    • EPS estimate (next quarter): 0.56
    • EPS growth (this year): 10.8%
    • EPS growth (next year): 6.21%
    • EPS growth (next 5 years): 6.55%
    • EPS growth (quarter-over-quarter): 10.76%
    • Sales growth (past 5 years): 4.75%
    • Sales growth (quarter-over-quarter): 7.5%

    💡 Why invest in Southern Company?

    Southern Company presents fundamental strengths that position it well for investors seeking stable returns and consistent growth:

    • Dominant Market Presence: Southern Company maintains a large and established customer base across the Southeast United States, ensuring steady, predictable revenue from regulated utility operations providing essential daily services.
    • Comprehensive Energy Mix: The company operates a comprehensive mix of regulated utilities, competitive generation assets, and natural gas distribution systems that offer significant operational stability and long-term growth potential.
    • Sustainability Leadership Initiative: Southern Company demonstrates strong commitment to clean energy solutions and renewable technologies, strategically aligning with growing market demand for sustainable low-carbon energy sources.
    • Infrastructure Investment Strategy: Southern Company consistently invests substantial capital in modernizing and expanding their energy infrastructure, ensuring reliable electricity delivery while significantly enhancing operational efficiency.

    🐌 Key considerations before investing in Southern Company

    However, investors should carefully consider the challenges facing Southern Company in its competitive market landscape systematically:

    • Regulatory Policy Challenges: The energy sector operates under heavy regulation, and changes in government policies, environmental standards, or utility regulations can significantly impact Southern Company`s operations and profitability.
    • Energy Cost Fluctuations: Fluctuations in natural gas prices and substantial costs associated with integrating renewable energy sources can materially affect the company`s operational expenses and overall bottom line financial performance metrics.
    • Market Competition Risks: Southern Company faces increasing competition from other energy providers, including traditional utilities and innovative companies offering renewable energy solutions and distributed generation services efficiently.
    • Weather Dependency Risks: Extreme weather events, seasonal variations, and climate-related disruptions can significantly impact energy generation capacity, distribution infrastructure, and overall system reliability across the network.

    Final thoughts on Southern Company

    Southern Company`s strong market position, diversified portfolio, and focus on sustainability make it an attractive investment for long-term investors seeking exposure to the energy sector. However, significant regulatory challenges, fuel cost volatility, intensifying competition, and weather dependence require careful consideration and analysis before investing capital. Like a reliable power grid that adapts to changing demands, Southern Company`s ability to navigate these challenges will determine its continued success.

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