Best mid-cap utility stocks to invest in 2026

The mid-cap utility sector offers compelling investment opportunities as demand for reliable and sustainable energy solutions grows. These companies combine stable cash flows with strategic modernization to support resilient performance.

Pampa Energia strengthens its portfolio with investments in renewables and efficient natural gas production, aligning with cleaner energy trends. Capital Power leads decarbonization with an evolving mix that adds wind and solar while optimizing legacy assets. Otter Tail blends regulated utility operations with manufacturing, offering a unique combination of stability, diversification, and growth.

These mid-cap utilities highlight innovation and resilience, making them strong additions to diversified portfolios in 2025 for investors seeking dependable growth and measured risk. Dive into our analysis to see how they can deliver long-term value through modernization, efficiency initiatives, and prudent balance-sheet management.

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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:

  • Pampa Energia (NYSE:PAM)

    Pampa EnergГ­a is one of Argentina`s largest integrated energy companies, engaged in electricity generation, transmission, and distribution, as well as oil and gas exploration. Founded in 2005 and headquartered in Buenos Aires, the company has grown through acquisitions and strategic investments in the country`s energy sector. With a diverse portfolio of power plants, pipelines, and hydrocarbon assets, Pampa EnergГ­a plays a crucial role in Argentina`s energy infrastructure.

    The company`s core business spans power generation from thermal, hydro, and renewable sources, alongside the production and transportation of natural gas throughout Argentina. Pampa EnergГ­a operates one of the most extensive energy networks in Argentina, supplying electricity to millions of consumers across the nation. Committed to sustainability and innovation, the company continues to expand its renewable energy footprint while optimizing efficiency across its operations.

    Pampa Energia financial statements

    Analysts recommendation: 1.75

    Financial Health

    • Return on assets (ROA): 2.37%
    • Return on equity (ROE): 9.71%
    • Return on investment (ROI): 7%

    Profitability

    • Gross margin: 29.8%
    • Operating margin: 25.38%
    • Net profit margin: 16.72%

    Growth

    • EPS (past 5 years): 7.79%
    • EPS (current): 5.96
    • EPS estimate (next quarter): 1.36
    • EPS growth (this year): -81.8%
    • EPS growth (next year): 51.12%
    • EPS growth (next 5 years): -0.97%
    • EPS growth (quarter-over-quarter): -79.61%
    • Sales growth (past 5 years): 7.15%
    • Sales growth (quarter-over-quarter): 9.4%

    💡 Why invest in Pampa Energia?

    Pampa Energia`s robust profile makes it a tempting pick for investors seeking exposure to the dynamic Argentine energy sector:

    • Integrated Energy Champion: Pampa boasts the title of the largest independent and integrated energy company in Argentina, participating in both electricity and natural gas value chains for diversified revenue streams and market leadership.
    • Renewable Energy Expansion: Recognizing the evolving energy landscape, Pampa expands beyond traditional sources into renewable energy like wind farms and solar parks for strategic diversification and sustainable long-term growth opportunities.
    • Transmission Network Leadership: Through its subsidiary Transener, Pampa holds the leading position in extra-high voltage electricity transmission in Argentina with critical infrastructure providing stable cash flow and market dominance.
    • Geographic Market Reach: Beyond Argentina, Pampa expands its operations into neighboring countries like Chile and Uruguay, unlocking broader market opportunities and mitigating geographic concentration risk through regional diversification.

    🐌 Key considerations before investing in Pampa Energia

    However, Pampa faces several challenges that investors must evaluate carefully before making investment decisions systematically:

    • Stock Price Volatility: Like many energy companies, PAM`s stock can be volatile, reflecting expectations of future energy prices, economic conditions, and overall market sentiment requiring patient investment approaches and risk tolerance.
    • Regulatory Environment Uncertainty: Evolving regulations surrounding energy tariffs, subsidies, and environmental impacts can significantly impact Pampa`s operations and profitability requiring careful regulatory monitoring and adaptation.
    • Macroeconomic Instability Risks: Argentina`s history of economic instability and currency fluctuations can pose significant challenges for Pampa`s financial performance requiring close monitoring of economic conditions and risk management.
    • Rising Competitive Pressures: Established players and new entrants are vying for market share, challenging Pampa`s dominant position while requiring strategic competitive responses, market adaptation, and operational excellence initiatives.

    Final thoughts on Pampa Energia

    Pampa Energia`s integrated energy model, diversified generation mix, transmission leadership, and regional reach create compelling opportunities for investors seeking Argentine energy exposure. However, stock volatility, evolving regulations, macroeconomic sensitivity, and rising competition warrant careful evaluation of sector-specific risks and potential investment challenges. Pampa Energia leverages its integrated platform to generate value while adapting to the dynamic and evolving South American energy markets.

  • 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): 5.73%
    • Return on equity (ROE): 15.63%
    • Return on investment (ROI): 9.7%

    Profitability

    • Gross margin: 43.2%
    • Operating margin: 22.24%
    • Net profit margin: 21.16%

    Growth

    • EPS (past 5 years): 26.96%
    • EPS (current): 6.62
    • EPS estimate (next quarter): 1.32
    • EPS growth (this year): -5.4%
    • 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): 1.6%

    💡 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.

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