With the bond proxies all taking shots after years of outperformance in a low interest rate environment, some analysts we cover on Wall Street are becoming more bullish on the utility sector after it took a big hit this year. With Federal Reserve Chair Janet Yellen seemingly indicating that she may want to raise rates sooner, but slower, utility stocks are still a way for income investors to go.

UBS analysts have gone through their coverage universe and made price target and earnings revisions in front of upcoming earnings reports. We screened the list for the stocks rated Buy with the biggest upside to the UBS targets.

DTE Energy

The UBS team made no revisions to the estimates for this top stock to buy. DTE Energy Inc. (NYSE: DTE) is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. Its operating units include an electric utility serving 2.1 million customers in Southeastern Michigan and a natural gas utility serving 1.2 million customers in Michigan. The DTE Energy portfolio includes non-utility energy businesses focused on power and industrial projects, natural gas pipelines, gathering and storage, and energy marketing and trading.

The company raised its dividend by almost 6% at the end of June, and the surging growth and revitalization in Detroit after years of decline could also be helping to increase demand.

DTE shareholders are paid a very solid 3.8% dividend. The UBS price target for the stock is $93. The Thomson/First Call consensus price target is $87.33. The stock closed Monday at $77.41 per share.

ALSO READ: 4 Top Integrated Device Chip Makers to Buy Now
Dynegy

UBS lowers the price target slightly, but the company has solid upside potential. Dynegy Inc. (NYSE: DYN) has nearly 26,000 megawatts of power generation capacity and two retail electricity companies. Homefield Energy and Dynegy Energy Services are retail electricity providers serving businesses and residents in Illinois. Dynegy is capable of supplying 21 million homes with safe, reliable and economic energy.

While the company is expected to see a steep decline in second-quarter earnings, Dynegy recently announced an additional $30 million of transaction synergies, primarily related to 270 megawatts of low-cost uprates it is implementing at acquired unit. The company also just announced a $5.1 billion debt exchange offer for outstanding senior notes.

Dynegy currently does not pay a dividend. The UBS price target is lowered to $37 from $40, the consensus target is $39.35. The stock closed Monday at $28.28, so there is almost 30% upside to the UBS target.

NextEra Energy

This company may have been hit recently for a perceived lack of a renewables pipeline expansion. NextEra Energy Inc. (NYSE: NEE) is a leading clean energy company with consolidated revenues of approximately $17.0 billion and approximately 44,900 megawatts of generating capacity, which includes megawatts associated with non-controlling interests related to NextEra Energy Partners.

ALSO READ: 5 Telecom and Media Stocks to Own for the Rest of 2015

It recently completed a merger with Hawaiian Electric, which has put Hawaii on the leading edge of clean energy nationally, successfully integrating rooftop solar with 12% of its residential customers and helping meet 21% of customer electricity needs from renewable energy resources. The company supplies power to approximately 450,000 customers, or 95%, of Hawaii’s population through its electric utilities Hawaiian Electric Company, Hawaii Electric Light Company and Maui Electric Company. It also provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, one of Hawaii’s largest financial institutions.

NextEra shareholders are paid a very solid 3% dividend. The UBS price target is lowered to $116 from $118, and the consensus objective is $117.28. Shares closed Monday at $103.15.

Sempra Energy

This company recently announced plans to sell stock in Sempra Partners, a newly formed unit that will own stakes in renewable energy facilities and terminals that can import and export natural gas. Sempra Energy (NYSE: SRE) owns the San Diego Gas & Electric, which transmits and distributes electricity and natural gas. As of February 23, 2015, this segment provided energy service approximately to 3.4 million consumers through 1.4 million electric meters and 878,000 natural gas meters in San Diego and southern Orange counties. The Southern California Gas segment transmits, distributes and stores natural gas. As of February 6, 2015, this segment served approximately to 21 million consumers through 5.8 million meters in 500 communities. This segment’s service territory includes approximately 20,000 square miles throughout central and Southern California.

The company also recently announced that announced that its Mexican unit, Infraestructura Energética Nova SAB de C.V., through its subsidiary Gasoducto de Aguaprieta S. de R.L. de C.V., has been awarded a natural gas transportation contract in Chihuahua by the Comisión Federal de Electricidad. Expansion into Mexico could be a huge growth avenue for the company.

Sempra investors are paid a 2.75% dividend. The UBS price is dropped to $118 from $120, but earnings estimates are maintained at $4.80 for this year. The consensus target is $121.68, and the stock closed Monday at $102.02.

ALSO READ: 4 Top Jefferies Growth Stock Picks to Buy Now

With price targets and revisions ratcheted down, traders already have moved down stock prices, and that could give those looking to add a utility or two to a portfolio at a very solid price point.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.