3 Utility Stocks Set to Deliver 20%+ Returns in 2025

Utility stocks have long been a favorite for investors who are looking for stability and consistent returns in the current market. These companies provide essential services, and since these services are always in demand, utility stocks have underlying businesses with predictable earnings. Many of them also pay dividends, and it complements the capital appreciation as investors pile in during volatile periods.

Right now, trade tensions loom large, and while Trump has suggested that tariffs on China might de-escalate, the White House said this won’t be done without negotiations with China. There are no timelines. Plus, The Wall Street Journal said that tariffs could stay at 50-60%. This level of tariffs is still much higher than what Wall Street initially expected.

Even if you’re bullish on the broader economy, utility stocks are hard to ignore. They are facing minimal disruption from supply chain chaos or tariff hikes. Their operations are mostly domestic, so they sidestep any tariffs. It’s a good idea to keep a few of them in your portfolio to add more ballast.

SJW Group (SJW)

SJW Group (NASDAQ:SJW) is a water utility and real estate company, and the bulk of its revenue is generated from regulated water utility services. It also has some wastewater management services. It is a regulated utility, so its rates and returns are set by state public utility commissions. As such, there are predictable revenue streams through approved rate increases as the company invests in infrastructure.

Water utility companies rely on local resources and infrastructure instead of imported goods, so there’s little exposure to global trade volatility. Investors could flock here if the volatility keeps getting worse, as it has a low beta and has a solid dividend track record with 57 consecutive years of increases and a dividend yield of over 3%.

The California Public Utilities Commission recently deferred SJW’s cost of capital filing to 2026. Moreover, Q4 2024 EPS came in at $0.74 and handily surpassed estimates of $0.55. Revenue grew 15.4% to $197.8 million and beat forecasts by $10.3 million.

The stock is down by 32.7% from its peak in December 2022 and is down 1% in the past year. SJW stock is likely to recover in the coming years, and even a partial recovery would lead to 20%-plus upside.

Pampa Energia S.A. (PAM)

Pampa Energia S.A. (NYSE:PAM) is a big player in Argentina’s energy scene, and it has its hands in a bit of everything since it touches multiple parts of the energy value chain. Energy generation is a core part of the business. It controls around 13% of Argentina’s total electricity supply.

Argentina has gotten a lot of attention due to Javier Milei’s massive cost-cutting policies and his fight with the country’s inflation problem. Inflation has come down dramatically since Milei was elected, and if the economy starts to grow in the coming quarters, Pampa could be one of the biggest winners.

So far, it has already been delivering some solid gains. The stock has gained 732.2% in the past five years and 77.4% in just the past year alone. It is down 14% year-to-date, but a recovery is almost given considering the company has been firing on all cylinders. It churned out a 21% increase in average output in 2024, with oil equivalent production hitting 100,000 barrels per day. Gas production rose 11% year-on-year in Q4, and adjusted EBITDA for the quarter reached $182 million.

The company’s exposure to Argentina’s Vaca Muerta shale play has long-term growth potential. It is also ramping up unconventional gas production. PAM is a solid long-term buy in my book. 20% upside this year is not a given since it does have some heavy near-term CapEx. By 2027, though, management expects to flip back to strong free cash flow.

NextEra Energy (NEE)

NextEra Energy (NYSE:NEE) is one of the biggest clean energy companies. It mainly focuses on energy generation through renewables. Florida Power & Light is their regulated utility arm that delivers electricity to millions of Floridians. On the other hand, NextEra Energy Resources is one of the world’s largest producers of wind and solar energy.

It recently reported its Q1 earnings and topped EPS estimates. EPS came in at $0.99 and beat consensus estimates of $0.97. Revenue of $6.25 billion fell short of $6.64 billion, but the market is still bullish here since the guidance is steady and has ambitious targets.

NextEra projected EPS of $3.45 to $3.7 for the full year and $3.63 to $4 next year. It sees $3.85 to $4.32 for 2026. These targets are very solid for a utility company and imply an annual EPS growth of around 6-8% annually off the 2024 base.

Operating cash flow growth is expected to match or exceed EPS growth, and it also targets 10% annual dividend growth through 2026.

With framework agreements for up to 10.5 GW with Fortune 50 customers by 2030, NextEra’s growth is locked in. A 20% stock upside is realistic if it executes on this pipeline.

The consensus price target of $84.5 implies 23.3% upside.

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