The utilities sector is experiencing a significant upswing in 2026, and Wall Street is optimistic about several dividend-paying companies poised for growth. On Friday, the S&P 500’s utilities sector surged more than 2%, marking its longest rally since July 2024, with gains totaling 8% so far this year. According to BTIG analyst Alex Kania, this represents the best start to a year for the sector in over 25 years. Kania noted in a recent report that when utilities perform well early in the year, they often continue that positive trajectory throughout the entire year.
Several key earnings reports have fueled this rally, particularly from American Electric Power and Entergy. American Electric Power (AEP) received an upgrade from Wolfe Research, boosted by a solid fourth-quarter performance that saw adjusted earnings of $1.19 per share on revenues of $5.31 billion, exceeding FactSet’s predictions of $1.15 per share and $4.89 billion in revenue. Wolfe analyst Steve Fleishman emphasized the company’s strong execution under new management and highlighted significant growth potential, particularly a $5 billion investment in transmission infrastructure, which includes a $2.65 billion purchase of solid oxide fuel cells from Bloom Energy to support data center operations. Fleishman believes this expansion could yield an incremental demand of 56 gigawatts by 2030, indicating substantial growth opportunities for AEP. With shares climbing over 12% this year and a current dividend yield of 2.9%, 10 out of 24 analysts have rated AEP as a buy or strong buy, according to LSEG.
Meanwhile, Entergy also caught the attention of analysts, with BTIG reaffirming its buy rating and maintaining a price target of $111. This suggests nearly a 9% upside from its recent trading level. In the fourth quarter, Entergy’s adjusted earnings hit 51 cents per share, slightly below the FactSet consensus of 52 cents, while the company projected its 2026 earnings to fall between $4.25 and $4.45 per share. The consensus estimate aligns closely, sitting at $4.38 per share. Kania noted Entergy’s ambitious growth outlook, projecting an 8% compound annual growth rate for retail sales and a robust 15% for industrial sales through 2029, a notable increase from previous forecasts of 7% and 13-14%, respectively. Entergy’s shares have risen more than 14% this year, complemented by a dividend yield of 2.4%. Analysts remain largely positive, with 19 out of 25 rating the stock as a buy or strong buy.
The current dynamics in the utilities sector suggest a blend of rising growth potential and defensive positioning within the broader market, creating a fertile environment for these companies. As investors monitor this upward trend and the promising outlook for dividend payers, the utilities space is emerging as a reliable sector for growth and income in 2026.
—Reporting contributed by CNBC’s Michael Bloom and Nick Wells.
Original Source: https://www.cnbc.com/2026/02/13/this-sector-is-roaring-to-start-2026-wall-street-likes-these-dividend-payers.html
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Publish Date: 2026-02-14 01:46:00
