Goldman Sachs identifies three utility stocks with strong fundamentals and strategic positioning for 2026, highlighting projected EPS growth of 7%–9% and dividend yields exceeding 3.5%. The firm underscores infrastructure investment and decarbonization as key drivers.
- Duke Energy (DUK) forecasted 8.2% EPS growth through 2026
- NextEra Energy (NEE) projected 7.5% EPS growth with 50%+ renewable capacity
- Southern Company (SO) expected 9.0% EPS growth and 3.7% dividend yield
- Collective capital spending by top three utilities to reach $82 billion (2024–2026)
- Utilities sector outperformed S&P 500 by 3.2 percentage points in early 2026
- Grid modernization and decarbonization as primary growth catalysts
Goldman Sachs has outlined a targeted approach to utility sector investment for 2026, emphasizing long-term stability and earnings resilience in a shifting energy landscape. The firm’s analysis focuses on utilities with robust capital expenditure plans, regulatory tailwinds, and exposure to grid modernization and electrification trends. These structural shifts are expected to support earnings growth and improve return on equity across the sector. The firm’s top picks include Duke Energy Corp. (DUK), which is forecast to deliver 8.2% earnings per share (EPS) growth through 2026, driven by a $34 billion capital investment program over five years. NextEra Energy Inc. (NEE) ranks second, with a projected 7.5% EPS increase, supported by its expanding renewable portfolio—currently over 50% of total generating capacity—and strong regulatory approval for new transmission lines. Southern Company (SO) rounds out the top tier, with a 9.0% EPS growth forecast and a dividend yield of 3.7%, bolstered by its stake in the Georgia Power smart grid initiative and future nuclear project at Plant Vogtle. These three utilities are expected to see capital expenditures totaling $82 billion collectively between 2024 and 2026, significantly above historical averages. This investment surge is anticipated to drive maintenance and expansion revenue, while also enhancing long-term asset values. The firm notes that utilities with diversified generation mix and active public-private partnerships are better positioned to manage regulatory risk and inflationary pressures on construction costs. Market reaction has been favorable, with the utilities sector outperforming the broader S&P 500 by 3.2 percentage points in early 2026. Investors are increasingly favoring high-quality, dividend-paying utilities as inflation concerns persist and fixed-income yields remain volatile. The shift reflects a broader reallocation toward resilient, cash-generative assets with predictable returns.