Are you over the market's roller-coaster-like volatility? If so, utility stocks might be a great sector to consider. People must keep the gas and electricity on, so utilities are typically timeless businesses that thrive through good and bad times. Their stocks also tend to pay generous dividends, giving investors concrete returns, regardless of what the broader market does.
I wanted to highlight three top-notch utility stocks. They also generate and transport energy, giving them some additional growth potential. All three stocks have betas under 1.0, so they should be less reactive to the market's recent volatility.
You can own all three for just $250, so consider buying and holding these durable utility leaders forever.
1. NextEra Energy
Florida-based NextEra Energy(NYSE: NEE) is one of the world's largest energy conglomerates. Its subsidiary, Florida Power & Light Company, is America's largest electric utility, serving over 6 million accounts (12 million people) across Florida.
NextEra Energy is far more than a utility company, though. It's the world's largest producer of renewable energy from wind and solar, has an energy storage business, and operates seven commercial nuclear power units in the United States.
NextEra Energy has enjoyed decades of growth due to America's need for more electricity and efforts to shift the sources of that power from fossil fuels to renewables. NextEra has paid and raised its dividend for 30 consecutive years, and investors get a solid 3.4% yield at the current share price. The dividend payout ratio is still just 62% of 2025 earnings estimates, so investors can continue counting on their dividend checks arriving.
Clean energy investments remain strong, and electricity-thirsty data centers are popping up to support growing technology markets like artificial intelligence (AI) and cloud computing. Therefore, NextEra Energy should continue to grow. Analysts estimate the company will grow earnings by an average of over 7% annually over the long term, making NextEra a great way to invest in clean energy for the foreseeable future.
2. Enbridge
Canadian energy giant Enbridge(NYSE: ENB) is a key cog in how oil and gas flow throughout North America. Enbridge operates gas utilities that provide natural gas to approximately 3 million people across five U.S. states. That ties into its core midstream business, transporting oil and gas from Northwestern Canada to the Gulf Coast. If that weren't enough, Enbridge also has renewable energy projects, giving it diverse exposure throughout the continent's energy supply chain.
Enbridge's diverse business structure and constant, though fluctuating at times, energy demand in North America has made it a fantastic dividend stock. Investors can get a 6.2% dividend yield right now, and management has raised the payout for 28 consecutive years. Management anticipates growing the dividend by 3% for the next few years before settling into an estimated 5% pace over the long term.
Assuming the business grows at about the same pace, Enbridge could generate around 10% to 11% annualized total returns over the long haul. Since most comes via dividends, Enbridge is a solid high-floor stock that can give shareholders peace of mind and meaningful, tangible returns without selling shares.
3. American Electric Power
Approximately 5.6 million people across 11 states depend on American Electric Power(NASDAQ: AEP) for power. The company's operations extend beyond the utility segment, including America's most extensive transmission network, which spans over 40,000 miles of power lines, and a generation segment with 29,000 megawatts of capacity. In other words, American Electric Power does it all: It creates, transmits, and distributes electricity.
The company operates in Texas and swaths of the Midwest, including Ohio, Indiana, Michigan, Virginia, West Virginia, and more. Management is investing $54 billion over the next five years to help service increased load demand due to data centers and economic development. As a result, management anticipates the business growing earnings by 6% to 8% annually over the long term.
That growth should translate to solid dividend increases. The company has already raised its dividend for 15 consecutive years, and the payout ratio is only 63% of 2025 earnings estimates. The stock offers a solid initial yield of 3.5% at its current share price and long-term annualized total returns of around 9% to 10%. Its growth forecast and low beta, just 0.34, could produce returns similar to the broader market without nearly as much volatility.
Should you invest $1,000 in NextEra Energy right now?
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and NextEra Energy. The Motley Fool has a disclosure policy.
