Why Big Utilities Are Having a Quiet Moment Right Now

If you’ve been sleeping on utility stocks, there’s actually a solid case to wake up now. The electric power industry is hitting an interesting inflection point—and it’s got nothing to do with boring dividend plays.

The Setup: Interest Rates Finally Stop Being Evil

Remember when the Fed kept hiking rates to 5.5%? That was brutal for utilities. They need tons of capital to upgrade infrastructure, and higher borrowing costs made everything more expensive. Now that rates have dropped to 3.75-4%, the pain is easing. More cuts are coming, which means cheaper money for grid upgrades.

The Real Driver: Electricity Demand Is About to Explode

Here’s what everyone’s missing—AI data centers are hungry beasts. They consume way more power than streaming Netflix or scrolling Instagram. Factor in electric vehicle adoption, industrial reshoring, and boom, electricity consumption is projected to jump 2.5% in 2025 and 2.7% in 2026.

Better part? Utilities can actually raise prices. Average electricity prices are expected to climb 4.2-4.7% across commercial, industrial, and residential sectors. Translation: revenue growth without needing to sell more electrons.

The Green Energy Bonus

U.S. renewables are climbing from 23% of generation (2024) to 26% by 2026. The Inflation Reduction Act keeps throwing subsidies at solar and wind. For utilities, this means predictable long-term cash flows and lower regulatory risk.

The Numbers

The 57-stock Utility Electric Power industry has:

• Gained 15.6% over 12 months (beats its sector, trails S&P 500’s 22.3%)
• Trading at 13.91X EV/EBITDA—cheaper than S&P 500 at 19.07X
• Zacks Industry Rank #57 (top 24% of all industries)
• Aggregate earnings growth forecast: 3.9% YoY

Four Names Worth Watching

Duke Energy (DUK)

• Cut carbon emissions 44% since 2005, building clean generation portfolio
• Dividend yield: 3.3% (vs S&P 500’s 1.47%)
• Earnings forecast: +7.29% (2025), +6.08% (2026)
• Long-term growth: 6.43%

Dominion Energy (D)

• Spending $50B through 2029 on infrastructure
• Juiciest dividend: 4.5% yield
• Earnings forecast: +22.74% (2025), +5.63% (2026)
• Long-term growth: 8.13%

Entergy (ETR)

• 10,000 megawatts of clean energy projects operational or queued
• Investing $41B through 2029
• Earnings forecast: +6.85% (2025), +12.63% (2026)
• Long-term growth: 10.21%

CenterPoint Energy (CNP)

• $53B capex plan over next decade
• Dividend yield: 2.3%
• Earnings forecast: +8.64% (2025), +8.43% (2026)
• Long-term growth: 7.9%

All four carry Zacks Rank #2 (Buy), have ~$25B market caps, and hit the sweet spot of steady cash generation + growth visibility.