While technology and healthcare companies have led all S&P 500 sectors this year, up 25% and 22% respectively, coming in a solid third at 18% is the utility sector. After the strong performance of recent years, many investors may have considered that the move into utilities was done. The bottom line for well-rounded portfolios is that the top utility stocks provide solid total return with good dividends, and can actually trim back portfolio volatility. In a new report from Merrill Lynch, they stay very positive on the top utility stocks for the rest of the year and 2015.

With the potential for another brutal winter, and the distinct possibility that rates stay very benign next year, the top utility stocks fit almost any portfolio. We scanned the list of top stocks to buy at Merrill Lynch for the companies paying the highest current dividends to shareholders, and those expected to raise dividends the most over the coming years.

American Electric Power Co., Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.3 million customers in 11 states. The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. American Electric also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.

American Electric Power shareholders are paid a solid 3.7% dividend. The Merrill Lynch price target is $58. The Thomson/First Call consensus is at $57.79. Shares closed on Monday at $56.80.

Dominion Resources, Inc. (NYSE: D) is expected to grow the company dividend 7% this year, in line with the last four. The company pulled in operating revenue of $3.2 billion for the last three-month period, beating estimates by 4.8%. Although Dominion has boosted sales, it kept less than expected as profit. The company recently had some headline issues as a Virginia nuclear plant has some fuel rod issues. Fortunately, everything was contained with no environmental damage. Many analysts on Wall Street think that the new EPA bill may actually provide a tailwind for this top utility.

Dominion Investors are paid a 3.30% dividend. Merrill Lynch has a $75 price objective, and the consensus estimate for the stock is $74.53. Dominion closed Monday at $73.05.

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PG&E Corporation (NYSE: PCG) is one of the largest combined natural gas and electric utilities in the United States. Based in San Francisco, with more than 20,000 employees, the company delivers energy to nearly 16 million people in Northern and Central California. The company operates 141,215 circuit miles of electric distribution lines; 18,616 circuit miles of interconnected transmission lines; 42,141 miles of natural gas distribution pipelines; and 6,438 miles of gas transportation pipelines. It operates generation facilities with energy sources such as nuclear, hydroelectric, fossil fuel-fired, and photovoltaic.

PG&E shareholders are paid a 3.6% dividend. The Merrill Lynch price target for the stock is $51, and the consensus number is posted at $51.12. Shares closed trading on Monday at $49.22.

UIL Holdings Corporation (NYSE: UIL) is a smaller utility that could have solid upside for income accounts looking for conservative stocks. UIL is the parent company for The United Illuminating Company (UI), Connecticut Natural Gas Corporation (CNG), The Southern Connecticut Gas Company (SCG), and The Berkshire Gas Company (Berkshire), each more than 100 years old. The company provides for the transmission and delivery of electricity and other energy related services for Connecticut’s Greater New Haven and Bridgeport areas.

UIL investors are paid a very nice 4.4% dividend. The Merrill Lynch price objective for the stock is set at $41, and the consensus is at $41.33. The stock closed on Monday at $39.51.

PPL Corporation (NYSE: PPL) rounds out the preferred utility names at Merrill Lynch. The company is among the leading utility companies in the U.S. who intend to increase regulated operations and lower earnings volatility attached to competitive operations. Also, the company has diverse geographical operations, with operations in the U.K. and the U.S., making it an outstanding choice for conservative accounts.

PPL Investors receive a solid dividend, which comes in at 4.2%. Merrill Lynch has set a $37 price target, and the consensus price target for the stock is $37. PPL closed Monday at $35.15.

While Utilities are hardly the momentum traders dream, they are solid additions to just about any portfolio, and could have big upside if we sustain another cold and long lasting winter. Plus, if you are an investor worried about a serious market correction, the utility sector is almost universally considered a go-to defensive place to hide. When the market drops big, investors run to the safety and liquidity of the Utility sector.

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