Companies operating in the Zacks Utility - Electric Power industry generate, transmit and distribute electricity to millions of customers across the United States. The industry's regulated business model, along with growing electricity demand, provides stable and predictable earnings. These utilities reward investors through reliable dividend payments and periodic share repurchase programs, making them a dependable defensive investment option. The utility sector is undergoing a significant energy transition and is rapidly shifting toward cleaner energy sources to reduce emissions.
Electricity consumption across the United States continues to grow, driven by rising data center demand, electrification trends and growing residential usage. Companies operating in this sector are making systematic investments in renewable energy projects, grid modernization and distribution system enhancements to maintain service reliability.
Amid the rising importance of electricity generation and distribution companies, let us compare Alliant Energy Corporation LNT and Ameren Corporation AEE. These two regulated electric utilities are benefiting from rising electricity demand driven by data center growth, systematic investment in infrastructure development and renewable expansion.
Alliant Energy and Ameren are well-established utilities with strong positions in the sector. Examining their fundamentals side by side can reveal which stock presents the most attractive investment opportunity.
AEE & LNT’s Earnings Growth Projections
The Zacks Consensus Estimate for AEE’s earnings per share (EPS) is pegged at $5.36 in 2026 and $5.77 in 2027, suggesting year-over-year growth of 6.56% and 7.63%, respectively. AEE’s long-term (three to five years) earnings growth is currently pinned at 9.27%.
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The Zacks Consensus Estimate for LNT’s EPS is pegged at $3.43 in 2026 and $3.68 in 2027, suggesting year-over-year growth of 6.52% and 7.29%, respectively. LNT’s long-term earnings growth is currently pinned at 7.15%.
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AEE & LNT’s Return on Equity
Return on Equity (“ROE”) measures how effectively a company uses shareholders’ funds to generate profit, with a higher ROE indicating stronger operational efficiency and value creation. ROE is an important indicator of management effectiveness and financial strength, reflecting a company's ability to generate growth from its available resources.
Alliant Energy’s current ROE is 11.37%, higher than Ameren's 10.94% and the industry’s average of 11.09%. LNT utilizes shareholders’ capital more efficiently and generates a higher return.
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AEE & LNT’s Dividend Yield
Utility companies reward shareholders through regular dividend payments, reflecting their commitment to providing steady returns on invested capital. It highlights the company’s earnings stability and strong cash flow.
Currently, the dividend yield for LNT is 2.94%, while that for AEE 2.75%. The dividend yields of both companies are higher than the S&P 500’s yield of 1.45%.
AEE & LNT’s Capital Investment Plans
Utilities require significant capital expenditure for infrastructure development, enhancing system reliability and maintaining their extensive asset base. Electric utilities engaged in power generation and distribution regularly invest in renewable expansion, energy storage, replacement of outdated equipment and grid modernization. These investments enhance reliability by reducing outages even during extreme weather conditions.
Ameren plans to invest $31.8 billion during 2026-2030 in infrastructure development, grid modernization and renewable energy expansion to enhance service reliability and ensure safe operations for customers. Alliant Energy aims to invest $13.4 billion during 2026-2029 for infrastructure upgradation, support cleaner energy generation and drive 12% rate-based growth.
AEE & LNT’s Price Performance
Alliant Energy’s shares have gained 20.5% over the past year compared with Ameren’s rally of 13.9%.
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Overall Assessment
Alliant Energy and Ameren both benefit from rising electricity demand driven by economic growth within their service territories, increasing data center activity and substantial infrastructure investments aimed at reliably serving millions of customers across the United States.
However, our choice at the moment is LNT, given its strong ROE, higher dividend yield and better price performance than AEE. Both AEE and LNT carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).