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Best Utilities Stocks for Stability and Growth in 2025

By: MarketBeat

May 21, 2025 at 08:00 AM EDT

Utilities sources There are certain predictable themes in investing. One of those is that utilities stocks tend to shine in times of uncertainty. In 2025, the Utilities Select Sector SPDR Fund (NYSEARCA: XLU) is up about 9.3% and approaching its all-time high (ATH). Add in a dividend yield of 2.76%, and the total return is about 12%, which is well above the year-to-date performance of the S&P 500.

Utilities are defensive stocks because consumers need power no matter what’s happening in the economy. Plus, a strict regulatory framework benefits both consumers and companies and allows companies to deliver for shareholders.

That shareholder value frequently shows up in the form of dividends. Owning these stocks can provide investors with income, and if they reinvest those dividends, they add to the stock's total return.

Of course, a lot can change in the second half of the year. However, if the economy takes off, it won’t negate the demand for utilities and will likely mean that supply has increased. That’s why it could be time for investors to look at utilities stocks as part of a diversified portfolio.

Here are three names to consider.

A Forward-Looking Market Likes What It Sees in Constellation Energy

[content-module:Forecast|NASDAQ: CEG]

Earnings reports give companies an opportunity to tell their story. The hope is that investors will play the long game rather than put too much emphasis on the headline numbers. That seems to be playing out exactly as Constellation Energy Corp. (NASDAQ: CEG) had hoped.

It’s not that the company’s numbers weren’t good. Revenue of $6.79 billion was 24.7% higher than the $5.44 billion analysts were forecasting. But the company had a slight miss on the bottom line. Earnings per share of $2.14 were less than the $2.22 that analysts were expecting.

That hasn’t stopped CEG stock from moving up 18% since the report came out. That’s because the company announced that it was close to an agreement to secure long-term agreements to deliver nuclear power for data centers. It will take years to build and permit new nuclear power plants, but Constellation Energy already has a portfolio of nuclear plants in operation. That’s the story that investors see playing out as demand for power increases in the coming years.

CEG stock has a dividend yield of just 0.75%, but it more than makes up for that with stock price growth of over 30% in 2025. Analysts have also been raising their price targets since the earnings report was released.

One of the S&P 500’s Best-Performing Stocks Has Room to Move Higher

[content-module:Forecast|NYSE: NRG]

NRG Energy Inc. (NYSE: NRG) is another stock benefiting from data center growth. The company has a diverse power portfolio that produces and sells electricity using coal, oil, solar, and battery storage.

For the world to cover the insatiable demand for power, it needs new power plants. NRG is partnering with GE Vernova (NYSE: GEV) to build new power plants through the rest of the decade. Analysts are buying the story and have been raising their price targets since the company reported earnings in May. Wells Fargo & Co. (NYSE: WFC) is the most bullish of the analysts tracked by MarketBeat with a price target of $200.

NRG stock is up more than 77% as of May 20, 2025. That makes it one of the best-performing stocks in the S&P 500. Add in a dividend of 1.1%, and you can see why investors are bullish on the stock. However, the stock is currently in the overbought range according to the Relative Strength Indicator (RSI). That means investors may want to use any pullback for a more favorable entry point.

Short-Term Noise May Offer a Better Entry for EXC Stock

[content-module:Forecast|NASDAQ: EXC]

The last name on this list is Exelon Corp. (NASDAQ: EXC). Many may call Exelon a traditional utility that purchases, transmits, and distributes electricity and natural gas to residential customers.

The stock is down about 6% in May. One reason is that the company announced a $173 million settlement with shareholders. Exelon was accused of misleading investors about federal bribery accusations tied to ComEd. That news is overshadowing a strong earnings report that had the company beating on the top and bottom lines.

Compared to the 30% and 70% year-to-date gains of the other two names on this list, Exelon’s 18% stock price growth may seem weak, even with the best dividend of the group, with a 3.6% yield. But with EXC stock having already sold off, it may be in the best position for growth in the next two quarters.

Are Utilities Stocks Set to Outperform in a Volatile Market?

In a market environment marked by both volatility and evolving investor priorities, utilities stocks like Constellation Energy, NRG Energy, and Exelon are proving their value. Whether it's the forward-looking nuclear strategy of Constellation, the diversified growth and partnerships driving NRG, or the high-yield stability of Exelon, each offers a compelling case for inclusion in a balanced portfolio. As the sector approaches record highs and continues to benefit from structural demand, utilities may not only serve as a defensive play but also as a source of meaningful returns in the months ahead. Investors would do well to consider these names while the broader market catches up to their potential.

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