The utilities sector is poised to perform well in 2026, and Wall Street is upbeat on several dividend companies with solid prospects. The S&P 500’s utilities sector was a big winner in Friday trading, rising more than 2% on the day. The sector’s 8% pop in 2026 also means utilities are off to their best start to the year in at least the past 25 years, according to BTIG analyst Alex Kania. XLU YTD Mountain 2026 State Street Utilities Select Sector SPDR ETF “Aside from 2020, utilities are on track for continued positive performance for the full year if they were operational during this period,” he said in a report Friday. “We continue to see a combination of tailwinds from rising utility growth potential and defensive moves across the market to support the sector,” the analyst added. This recent performance is driven by some positive financial results from a range of power companies, including American Electric Power and Entergy. American Electric Power’s Wolf Research on Friday upgraded American Electric Power’s rating to Outperform its peers after a strong fourth-quarter report. The company reported adjusted earnings of $1.19 per share on revenue of $5.31 billion in the same period, compared to the FactSet consensus of $1.15 per share and revenue of $4.89 billion. “AEP is performing well under new management and continues to add potential upside to its growth outlook,” Wolf analyst Steve Fleischman said in a note Friday, noting that his team expects earnings expansion and earnings per share upside. “AEP noted an upside from $5 billion in incremental transmission capital spending,” he added, noting that $2.65 billion of that is related to a deal to buy solid oxide fuel cells from Bloom Energy as part of a plan to accelerate data center growth. A long-term tailwind for AEP will be growth opportunities from data centers, with “56 gigawatts of additional load expected by 2030, but only 28 gigawatts in the plan,” Fleischman added. Analysts have a price target of $142, implying an increase of about 12% from Thursday’s closing price. The stock is up more than 12% heading into 2026, and its current dividend yield is 2.9%. According to LSEG, 10 out of 24 analysts rate American Electric Power as a “buy” or “strong buy,” while 13 rate it unchanged. Entergy BTIG reiterated its buy rating on Entergy on Friday and maintained its $111 price target. This suggests an increase of nearly 9% from Thursday’s closing price. Entergy’s adjusted earnings for the fourth quarter were 51 cents per share, slightly below the FactSet consensus of 52 cents per share. The company also released 2026 guidance, calling for adjusted earnings of $4.25 to $4.45 per share. The FactSet consensus is within that range, at $4.38 per share. BTIG’s Kania highlighted Entergy’s sales growth outlook, with the company currently seeing an average annual growth rate of approximately 8% for retail sales and a CAGR of 15% for industrial sales through 2029. Finally, the company pegs retail sales growth at about 7%, with industrial sales in the range of 13% to 14%. “Noting that ETR maintains a pipeline of 7-12 GW, we believe ETR is taking a more conservative stance in announcing new projects on the horizon,” Kania wrote. Entergy stock is up over 14% in 2026, and its current dividend yield is 2.4%. Analysts are generally bullish, with 19 out of 25 rating the stock a “buy” or “strong buy,” according to LSEG. —CNBC’s Michael Bloom and Nick Wells contributed reporting.
