The utilities sector is on a roll in 2026, and Wall Street is feeling upbeat about a couple of dividend payers with solid prospects. The S & P 500’s utilities sector was the big winner in Friday’s trading, up more than 2% on the day. It’s on track for its seventh positive session – its longest rally since July 2024. The sector’s 8% pop in 2026 also means that utilities are having their best start to a year in at least 25 years, according to BTIG analyst Alex Kania. XLU YTD mountain The State Street Utilities Select Sector SPDR ETF in 2026 “Apart from 2020 if utilities are up during this period, they remain in line to continue positive performance for the full year,” he said in a Friday report. “We continue to see the combination of tailwinds from rising utility growth potential plus the defensive moves in the overall market as supportive of the sector,” the analyst added. Powering this recent run are a few upbeat earnings calls from a slate of utilities, namely American Electric Power and Entergy . American Electric Power Wolfe Research lifted its rating on American Electric Power to outperform from peer perform on Friday, fresh off a solid fourth-quarter report. The company reported adjusted earnings of $1.19 per share on revenue of $5.31 billion in the period, while the FactSet consensus called for $1.15 per share and $4.89 billion in revenue. “AEP is executing well under new management and keeps adding potential upsides to the growth outlook,” Wolfe analyst Steve Fleishman wrote in his Friday report, noting that his team sees upside for price-earnings expansion and earnings per share. “AEP noted upside from $5B in incremental transmission capex,” he added, noting that $2.65 billion of that was related to a deal in which it purchased solid oxide fuel cells from Bloom Energy as part of a plan to power data center growth . A long-term tailwind for AEP would be its growth opportunities stemming from data centers, which will “drive 56 [gigawatts] of incremental load by 2030, but only 28 GW is in its plan,” Fleishman added. The analyst’s price target of $142 calls for about 12% upside from Thursday’s close. Shares are roaring to start 2026, up more than 12%, and the stock offers a current dividend yield of 2.9%. In all, 10 out of 24 analysts rate American Electric Power as buy or strong buy, and 13 deem it hold, according to LSEG. Entergy BTIG reiterated its buy rating for Entergy on Friday, maintaining its price target of $111. That suggests nearly 9% upside from Thursday’s close. Adjusted earnings for Entergy came in at 51 cents per share in the fourth quarter, just falling short of the FactSet consensus for 52 cents per share. The company also issued its 2026 guidance, calling for adjusted earnings of $4.25 to $4.45 per share. The FactSet consensus lands within the range, coming in at $4.38 per share. BTIG’s Kania highlighted Entergy’s outlook for sales growth, in which the company is now calling for a roughly 8% compound annual growth rate for retail sales and a 15% CAGR for industrial sales through 2029. The company last called for a roughly 7% sales growth for retail and a range of 13% to 14% for industrial sales. “We note that ETR has maintained its 7-12 GW pipeline and believe it has taken a more conservative stance in announcing new projects that are in its line-of-sight,” Kania wrote. Shares of Entergy are up more than 14% in 2026, and the stock has a current dividend yield of 2.4%. Analysts are largely bullish, with 19 out of 25 rating it a buy or strong buy, per LSEG. —CNBC’s Michael Bloom and Nick Wells contributed reporting.
This sector is having its best start since at least 2000. Wall Street likes these dividend payers