UBS Names 3 Preferred European Utility Stocks for Investors Now

UBS has named three European utilities firms as its preferred picks in the sector, citing their strategic focus on renewable energy, infrastructure spending, and environmental services. The chosen companies are characterized by robust growth prospects, defensive appeal, and valuations that are appealing when stacked against sector peers.

The selections stem from UBS's Equity Compass report, which assesses businesses on macroeconomic, structural, and company-specific fundamentals. That framework taps into transformational innovation opportunities in power and resources which, in UBS's view, are set to shape markets over the next ten years.

Engie

The Paris-headquartered integrated utility runs across 30 countries, holds major stakes in French gas networks, and boasts roughly 103 GW of combined renewable and flexible power generation capacity. Engie has earmarked EUR 34-38 billion for growth investments from 2026 to 2028, with around 90% of that capital going toward renewables, battery storage, and infrastructure.

Engie plans to grow its renewable and storage portfolio from 57 GW in 2025 to 95 GW by 2030. The company closed its purchase of UK Power Networks in May 2026, an acquisition carrying an enterprise value of GBP 15.8 billion. By 2028, roughly two-thirds of EBIT is expected to come from regulated and long-term contracted operations.

UBS points out that Engie's stock trades at a notable discount to comparable firms while offering attractive earnings multiples and dividend yields. The group's dividend policy calls for a payout ratio of 65-75%, backed by a floor of EUR 1.1 per share.

The German group has evolved into a leading renewable developer on a global scale. RWE plans to invest EUR 35 billion between 2025 and 2030, with the funds directed at offshore and onshore wind, solar, battery storage, flexible generation, and hydrogen.

RWE currently has 12.5 GW of capacity in construction, a pipeline expected to expand its renewable and flexible generation portfolio to roughly 50 GW from about 38 GW today.

RWE is aiming for compound annual growth in EPS of 18% over 2025-2027 and 12% over 2026-2031. In November 2024, the utility unveiled a buyback program for up to EUR 1.5 billion in its own shares through Q2 2026, equivalent to roughly 6-7% of its current market value.

Veolia Environnement

Veolia Environnement is a French environmental services firm active across the water, waste, and energy value chains.

During 2025, Veolia supplied drinking water to 110 million people, provided wastewater services for 97 million, generated 45 TWh of energy, and processed 64 million metric tonnes of waste.

Management projects organic EBITDA growth of around 5-6% per year, lifting EBITDA to approximately EUR 8 billion by 2027. UBS adds that Veolia's stock currently sits close to the bottom of its historical valuation band.

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