Data center electricity demand has surged over the last few years as AI workloads have scaled up, becoming one of the biggest tailwinds for the U.S. utility sector. Training and running large AI models require massive, continuous computing power, and technology hyperscalers have been signing large-load power purchase agreements to secure capacity for new facilities. Because data centers run around the clock, as cooling systems, servers, and networking equipment don’t power down overnight the way residential or commercial demand does, they create a more constant, predictable load that utilities can plan around. Still, the sheer scale of new demand is straining grids that were built for slower, more gradual growth. This has pushed utility companies to accelerate infrastructure spending, extend the life of existing power plants, and, in some cases, explore new generation sources to keep pace, all of which factor into the growth outlooks that continue to make utility stocks attractive to investors positioning around the AI boom.
Utility stocks had a big run last year as investors began to grasp that AI-fueled data center demand had increased. Some have pulled back in price as investors and institutional portfolio managers moved to lock in big gains. We decided to screen our 24/7 Wall St. utility research database, looking for quality stocks that pay among the highest dividends in the sector and trade at prices that make more sense now than last year. Five look like solid picks for growth and income investors seeking dependable, and in some cases rising, dividends.
Why are we covering utility stocks?
Utility dividend stocks offer investors a reliable source of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
Avista
This is an off-the-radar name with a strong 4.64% dividend. Avista (NYSE:AVA) is an energy company that produces, transmits, and distributes energy, as well as engages in other energy-related businesses.
Its segments include Avista Utilities and AEL&P.
The Avista Utilities segment comprises regulated utility operations in Washington, Idaho, Oregon, and Montana. It engages in electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho. It also provides natural gas distribution service in parts of northeastern and southwestern Oregon.
Additionally, it supplies electricity to a small number of customers in Montana. Avista Utilities also engages in wholesale purchases and sales of electricity and natural gas as an integral part of energy resource management and its load-serving obligation.
The AEL&P segment is a regulated utility providing electric services in Juneau, Alaska, that is a wholly owned subsidiary and the primary operating subsidiary of AERC.
Weiss Ratings has a Buy rating, but we could not find a price target.
Brookfield Infrastructure Partners
This limited partnership yields 4.64% and is among the most diverse companies in the sector. Brookfield Infrastructure Partners (NYSE:BIP | BIP Price Prediction) is a global infrastructure company that owns and operates long-life assets in the utilities, transport, midstream, and data sectors across the United States, Asia Pacific, and Europe.
The company’s segments include Utilities, Transport, Midstream, and Data.
The Utilities segment consists of regulated transmission (natural gas and electricity) and commercial and residential distribution (electricity, natural gas, and water connections) operations.
The Transport segment includes infrastructure assets that provide transportation, storage, and handling services for merchandise goods, commodities, and passengers. The Transport segment consists of diversified terminals, rail, and toll roads.
The Midstream segment comprises systems that provide natural gas transmission, gathering, processing, and storage services.
The Data segment includes critical infrastructure that provides telecommunication, fiber, and data storage services.
Morgan Stanley has an Overweight rating with a $46 target price.
Edison International
With one of the highest dividends in the utility sector at 4.37%, this is a strong idea for the rest of 2026. Edison International (NYSE:EIX) is an electric utility holding company focused on providing clean and reliable energy and energy services through its independent companies. It is the parent holding company of Southern California Edison Company (SCE) and Trio.
SCE is a public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area across Southern, Central, and Coastal California.
Trio is a global energy advisory firm providing integrated sustainability and energy advisory services to large commercial, industrial, and institutional organizations in North America and Europe.
Trio provides integrated strategy and implementation solutions in:
- Sustainability
- Renewables
- Energy procurement
- Conventional supply
- Energy optimization
- Transportation electrification
Barclays has an Overweight rating with a $77 price objective.
Eversource Energy
Eversource, an energy provider serving customers in the Northeast United States, posted strong first-quarter earnings. This under-the-radar conservative stock pays a solid 4.06% dividend. Eversource Energy (NYSE:ES) is a public utility holding company that provides energy delivery services.
The company operates through four segments:
- Electric Distribution
- Electric Transmission
- Natural Gas Distribution
- Water Distribution
It is involved in transmitting and distributing electricity, as well as operating solar power facilities and natural gas facilities.
The company operates regulated water utilities that serve approximately 241,000 customers. It serves residential, commercial, industrial, municipal, and fire protection customers in Connecticut, Massachusetts, and New Hampshire.
Wells Fargo has an Overweight rating with a $76 target price.
Portland General Electric
This is a pure regulated utility in a fast-growing region with a strong renewable energy position, and it pays a rich 3.98% dividend. Utilities seeking West Coast exposure could find it very appealing. Portland General Electric (NYSE:POR) is engaged in the generation, wholesale purchase and sale, transmission, distribution, and retail sale of electricity to customers in the state of Oregon.
The company participates in the wholesale market by purchasing and selling electricity and natural gas to obtain power at a reasonable price to serve its retail customers. The company meets its retail load requirement with both company-owned generation and power purchased on the wholesale market.
Portland General Electric has five natural gas-fired generating facilities: PW1, PW2, Beaver, Coyote Springs Unit 1 (Coyote Springs), and Carty Generating Station (Carty).
It also owns and operates two wind farms, Biglow Canyon Wind Farm (Biglow Canyon) and Tucannon River Wind Farm (Tucannon River). Biglow Canyon is located in Sherman County, Oregon. The Tucannon River is located in southeastern Washington.
BTIG has a Buy rating with a $58 target price.
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