Best dividend utility stocks to invest in 2025

Utility stocks are known for their consistent dividends and defensive qualities, making them a reliable choice during times of market uncertainty. For income-focused investors, a handful of strong performers stand out in this stable but often overlooked sector.

Constellation Energy specializes in power generation, competitive energy supply, and sustainability solutions with a strong portfolio of nuclear, wind, solar, and hydroelectric assets. NRG Energy focuses on generating and selling electricity to residential, commercial, and industrial customers across the country through diverse power generation facilities. Capital Power develops, acquires, and operates electricity generation facilities while actively transitioning towards cleaner energy solutions and renewable projects.

Together with Southern Company – another proven dividend payer – these names represent some of the most appealing dividend utility stocks. Their stable performance and attractive yields make them strong picks for long-term portfolios 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 top 10 stocks mentioned in this article 5 years ago.

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 sustainability solutions. Founded in 2022 and headquartered in Baltimore, Maryland, the company was formed as a spin-off from Exelon Corporation to focus on clean energy and carbon-free power 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 energy efficiency solutions for businesses and consumers. 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: 1.79

    Financial Health

    • Return on assets (ROA): 4.48%
    • Return on equity (ROE): 23.52%
    • Return on investment (ROI): 14.72%

    Profitability

    • Gross margin: 21.77%
    • Operating margin: 15.39%
    • Net profit margin: 12.12%

    Growth

    • EPS (past 5 years): 28.15%
    • EPS (current): 9.59
    • EPS estimate (next quarter): 1.91
    • EPS growth (this year): 3.5%
    • EPS growth (next year): 18.82%
    • EPS growth (next 5 years): 11.58%
    • EPS growth (quarter-over-quarter): -86.47%
    • Sales growth (past 5 years): 4.5%
    • Sales growth (quarter-over-quarter): 11.4%

    💡 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.
    • 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.
    • 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.
    • Strong Financial Performance: Constellation demonstrates consistent revenue growth and profitability with strong cash flow generation, effectively navigating the dynamic energy market while supporting dividend payments.

    🐌 Key considerations before investing in Constellation Energy

    While Constellation illuminates the path towards a cleaner future with its clean energy focus and diversified operations, there are some challenges to consider before flipping the switch on this investment:

    • 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.
    • 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.
    • 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 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 a compelling investment opportunity for long-term investors seeking exposure to the evolving energy sector. 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 power generation and retail electricity services. The company was founded in 1989 and is headquartered in Houston, Texas. 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 country. The company operates a diverse portfolio of power plants, including natural gas, coal, nuclear, wind, and solar facilities. In addition to energy production, NRG is a major provider of retail electricity, offering customized energy plans, smart home solutions, and sustainable energy options to consumers. Through its commitment to innovation and sustainability, NRG continues to shape the future of energy in the United States.

    NRG Energy financial statements

    Analysts recommendation: 2.33

    Financial Health

    • Return on assets (ROA): 2.92%
    • Return on equity (ROE): 17.66%
    • Return on investment (ROI): 10.2%

    Profitability

    • Gross margin: 17.25%
    • Operating margin: 0.64%
    • Net profit margin: 1.78%

    Growth

    • EPS (past 5 years): -20.43%
    • EPS (current): 2.32
    • EPS estimate (next quarter): 1.17
    • EPS growth (this year): 12.3%
    • EPS growth (next year): 15.63%
    • EPS growth (next 5 years): 14.07%
    • EPS growth (quarter-over-quarter): 56.42%
    • Sales growth (past 5 years): 23.73%
    • Sales growth (quarter-over-quarter): 1.2%

    💡 Why invest in NRG Energy?

    NRG's unique position in the energy sector offers several potential advantages for investors seeking exposure to this critical and ever-changing industry:

    • 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.
    • 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.
    • Diversified Generation Portfolio: 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.
    • 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

    However, before investing in NRG Energy, it's crucial to consider the potential challenges they face:

    • 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.
    • Energy 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.
    • 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.

    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 market dynamics. Like a power grid balancing multiple energy sources, NRG's diversified approach provides stability while adapting to the changing energy landscape.

  • GE Vernova (NYSE:GEV)

    GE Vernova Inc., headquartered in Cambridge, Massachusetts, is a global energy technology company that emerged as an independent entity following General Electric's restructuring in April 2024. In its inaugural year, GE Vernova reported revenues of $34.9 billion, marking a 5% increase from the previous year, and achieved a net income of $1.55 billion, a significant turnaround from a $438 million loss in 2023. GE Vernova's core business focuses on delivering innovative energy solutions through its three primary segments: Power, Wind, and Electrification. The Power segment encompasses gas, nuclear, hydro, and steam power generation technologies. The Wind segment specializes in onshore and offshore wind turbines, while the Electrification segment provides grid solutions and software to modernize and optimize energy distribution.

    GE Vernova financial statements

    Analysts recommendation: N/A

    Financial Health

    • Return on assets (ROA): 1.79%
    • Return on equity (ROE): 11.41%
    • Return on investment (ROI): N/A

    Profitability

    • Gross margin: 18.47%
    • Operating margin: 5.92%
    • Net profit margin: 3.16%

    Growth

    • EPS (past 5 years): N/A
    • EPS (current): 4.13
    • EPS estimate (next quarter): N/A
    • EPS growth (this year): -60%
    • EPS growth (next year): N/A
    • EPS growth (next 5 years): N/A
    • EPS growth (quarter-over-quarter): N/A
    • Sales growth (past 5 years): N/A
    • Sales growth (quarter-over-quarter): 11.1%

    💡 Why invest in GE Vernova?

    GE Vernova offers several compelling reasons to consider investing:

    • Strong Financial Performance: In 2024, GE Vernova achieved a net income of $1.55 billion, a significant improvement from the previous year's loss.
    • Diversified Business Segments: The company's operations span Power, Wind, and Electrification, providing a balanced portfolio across the energy sector.
    • Robust Backlog: GE Vernova reported a backlog of $119 billion in 2024, indicating strong future revenue potential.
    • Strategic Partnerships: Collaborations with major companies, such as Amazon, enhance GE Vernova's market position and growth prospects.

    🐌 Key considerations before investing in GE Vernova

    However, prospective investors should weigh the following challenges:

    • Industry Cyclicality: The energy sector is subject to economic cycles, which can impact demand for GE Vernova's products and services.
    • Operational Challenges: The Wind segment has faced profitability issues, with projected segment EBITDA losses of $200 – $400 million.
    • Regulatory Risks: Operating in multiple jurisdictions exposes the company to complex and evolving regulatory environments.
    • Market Competition: GE Vernova competes with established players like Siemens Energy and ABB, which may affect market share and pricing power.

    Final thoughts on GE Vernova

    GE Vernova's successful transition to an independent entity, coupled with its diversified energy portfolio and strong financial performance in 2024, positions it as a promising player in the energy sector. While challenges such as industry cyclicality and operational hurdles in the Wind segment exist, the company's strategic partnerships and substantial backlog provide a solid foundation for future growth.

  • Otter Tail (NYSE:OTTR)

    Otter Tail Corporation is a diversified energy and infrastructure company primarily engaged in electric utility operations and manufacturing. 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.

    The company's electric utility segment focuses on providing reliable and affordable energy, with a 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): 6.28%
    • Return on equity (ROE): 17.14%
    • Return on investment (ROI): 10.9%

    Profitability

    • Gross margin: 43.23%
    • Operating margin: 29.52%
    • Net profit margin: 21.82%

    Growth

    • EPS (past 5 years): 26.96%
    • EPS (current): 6.79
    • EPS estimate (next quarter): 1.74
    • EPS growth (this year): -10.6%
    • EPS growth (next year): -10.8%
    • EPS growth (next 5 years): -10.82%
    • EPS growth (quarter-over-quarter): -8.46%
    • Sales growth (past 5 years): 7.67%
    • Sales growth (quarter-over-quarter): -2.7%

    💡 Why invest in Otter Tail?

    Why Consider Otter Tail Corporation for Your Community's Energy Needs?:

    • Focus on Renewables: 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.
    • Commitment to Reliability: Despite their focus on renewables, they prioritize providing consistent and reliable power to their customers through diversified generation sources and grid infrastructure investments.
    • Regional 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.
    • Investment in Infrastructure: They actively invest in building and maintaining clean energy infrastructure including wind farms and transmission systems, contributing to a more sustainable future and grid reliability.

    🐌 Key considerations before investing in Otter Tail

    Important considerations before partnering with Otter Tail Corporation include several operational and 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.
    • Weather Dependence: Wind power generation can fluctuate significantly depending on weather conditions and seasonal patterns, requiring backup power sources, grid balancing mechanisms, and operational flexibility.
    • Initial Investment Costs: Developing and integrating renewable energy infrastructure including wind farms and transmission systems can involve significant upfront capital costs, long payback periods, and financing challenges.

    Final thoughts on Otter Tail

    Otter Tail's focus on clean energy, regional development commitment, and diversified business model create compelling opportunities for investors seeking exposure to renewable energy transition and utility stability. However, limited geographic reach, weather dependence, and significant infrastructure investment costs warrant careful evaluation of regional utility dynamics and capital allocation strategies. Like skilled energy pioneers who balance traditional reliability with innovative clean technologies, Otter Tail leverages its diversified platform to deliver essential services while navigating the transformation toward sustainable energy markets.

  • Capital Power (TO:CPX)

    Capital Power Corporation is a North American power producer that develops, acquires, and operates electricity generation facilities. The company was founded in 2009 and is headquartered in Edmonton, Alberta, Canada. 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 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 renewable projects. Through strategic acquisitions and innovation, Capital Power aims to provide reliable and sustainable electricity while reducing its environmental impact.

    Capital Power financial statements

    Analysts recommendation: 2

    Financial Health

    • Return on assets (ROA): 2.22%
    • Return on equity (ROE): 10.04%
    • Return on investment (ROI): N/A

    Profitability

    • Gross margin: 41.42%
    • Operating margin: -37.35%
    • Net profit margin: 13.73%

    Growth

    • EPS (past 5 years): 0.155%
    • EPS (current): 3.12
    • EPS estimate (next quarter): 0.88
    • EPS growth (this year): 0.302%
    • 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): -46%

    💡 Why invest in Capital Power?

    Capital Power's strategic positioning and growth initiatives offer several compelling reasons to consider investing:

    • Diversified Energy 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.
    • Commitment to Sustainability: 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.
    • 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.
    • 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.

    🐌 Key considerations before investing in Capital Power

    However, prospective investors should weigh the following challenges:

    • Regulatory Risks: Evolving energy policies and environmental regulations across multiple jurisdictions could significantly impact the company's operations, compliance costs, and long-term profitability.
    • Commodity Price Volatility: 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.
    • High 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.
    • Competitive Market: 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.

    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. Like skilled energy architects who design balanced power systems, Capital Power leverages its diversified generation mix to deliver reliable electricity while navigating the complex transformation toward 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: 2.5

    Financial Health

    • Return on assets (ROA): 3.39%
    • Return on equity (ROE): 11.23%
    • Return on investment (ROI): 4.7%

    Profitability

    • Gross margin: 48.74%
    • Operating margin: 28.08%
    • Net profit margin: 15.1%

    Growth

    • EPS (past 5 years): -2.34%
    • EPS (current): 3.87
    • EPS estimate (next quarter): 0.98
    • EPS growth (this year): -27.5%
    • EPS growth (next year): 6.97%
    • EPS growth (next 5 years): 6.55%
    • EPS growth (quarter-over-quarter): 17.61%
    • Sales growth (past 5 years): 4.75%
    • Sales growth (quarter-over-quarter): 7.9%

    💡 Why invest in Southern Company?

    Southern Company's strong market position, diversified portfolio, and focus on sustainability make them an attractive prospect for investors seeking exposure to the evolving energy sector:

    • Dominant Market Presence: Southern Company maintains a large and established customer base across the Southeast United States, ensuring steady revenue from regulated utility operations providing essential services.
    • Comprehensive Energy Mix: The company operates a comprehensive mix of regulated utilities, competitive generation assets, and natural gas distribution systems that offer operational stability and 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 energy sources.
    • Infrastructure Investment Strategy: Southern Company consistently invests substantial capital in modernizing and expanding their energy infrastructure, ensuring reliable electricity delivery while enhancing operational efficiency.

    🐌 Key considerations before investing in Southern Company

    The energy sector presents its own set of challenges, and Southern Company faces several key factors that investors should consider:

    • 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 bottom line performance.
    • 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.
    • Weather Dependency Risks: Extreme weather events, seasonal variations, and climate-related disruptions can significantly impact energy generation capacity, distribution infrastructure, and system reliability.

    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, regulatory challenges, fuel cost volatility, competition, and weather dependence require careful consideration before investing. Like a reliable power grid that adapts to changing demands, Southern Company's ability to navigate these challenges will determine its continued success.

If you are interested in other stock categories, check out my other lists of the best dividend utility, financial, healthcare, energy, tech, basic materials, retail, industrial stocks.