Algonquin Power & Utilities vs. CenterPoint Energy: Which Utilities Stock Is a Better Buy in 2026?

Choosing between Algonquin Power & Utilities (NYSE:AQN) and CenterPoint Energy (NYSE:CNP) requires balancing income potential against geographical reach. Both companies provide essential services, making them popular choices for everyday investors.

Algonquin operates a mix of regulated water, gas, and electric services across 13 states and multiple countries. CenterPoint focuses on massive delivery networks in major hubs like Houston, Minnesota, and Indiana. This comparison explores their financial health and valuations to help you decide which stock fits your strategy.

The case for Algonquin Power & Utilities

Algonquin manages a diverse portfolio through its Liberty brand, serving approximately 1.3 million customer connections. It provides electricity, natural gas, water, and wastewater services across North America, Chile, and Bermuda. Its operations span 13 U.S. states and one Canadian province, allowing the utility to benefit from diverse revenue streams and varied regulatory environments.

In FY 2025, revenue reached nearly $2.4 billion, representing a growth rate of close to 4.9% compared to the previous year. The company reported net income of approximately $208 million, which corresponds to a net margin of roughly 8.5%. This net margin reflects the percentage of total revenue remaining as profit after all expenses and taxes are paid, providing a look at the bottom-line efficiency.

As of its December 2025 balance sheet, the debt-to-equity ratio is nearly 1.4x. This ratio measures total debt against shareholder equity, where a higher number indicates more reliance on borrowed funds for expansion. The company reported a current ratio of roughly 1.0x, which shows its ability to cover short-term liabilities with current assets. Free cash flow was negative $249 million, which is calculated as operating cash minus capital spending. This metric is a key focus for those investing in utility stocks because it indicates the cash available for dividends or debt repayment.

The case for CenterPoint Energy

CenterPoint serves approximately 7 million metered customers through its electric and natural gas delivery networks in major regions. Its primary markets include Greater Houston and several Midwestern states like Minnesota and Indiana. Two major customers, NRG Energy and Vistra, account for nearly 60% of billed receivables in its Houston electric segment. Customer concentration like this adds a layer of risk to the business, as the company depends on these entities to remit payments on a timely basis.

For FY 2025, revenue reached nearly $9.4 billion, showing a year-over-year increase of approximately 8.3%. Net income for the period was roughly $1.1 billion, resulting in a net margin of close to 11.2%. This net margin signifies how much of every dollar in sales the utility kept as profit, and it remained relatively consistent compared to the previous year. These results highlight the scale of the company's delivery network in high-demand urban centers.

According to its December 2025 balance sheet, the company carries a debt-to-equity ratio of 2.1x. This indicates that its total liabilities are more than double its shareholder equity, a common trait for utilities with large infrastructure projects. The current ratio is approximately 0.9x, showing its liquidity position relative to short-term obligations.

Risk profile comparison

Algonquin faces significant regulatory and operational risks as it manages water and electric services across diverse regions. Frequent rate case filings are necessary to recover the heavy costs of infrastructure maintenance and environmental compliance. Any failure to secure favorable terms from regulators can lead to lower net margins and reduced cash flow.

CenterPoint deals with regulatory lag and the risk that regulators may deny full cost recovery for its infrastructure projects. Severe weather in the Houston area often causes physical damage and leads to litigation or regulatory scrutiny regarding service reliability. The company also depends on NRG Energy and Vistra for a significant portion of its billing receivables, creating concentration risk if those entities face financial trouble.

Valuation comparison

CenterPoint carries a higher Forward P/E, comparing price to future earnings estimates, and a higher P/S ratio, which measures price against revenue.

Sector benchmark uses the SPDR XLU sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

I'd go with CenterPoint Energy. Both companies offer the kind of steady, predictable utility business that long-term investors tend to appreciate. But one of them has an unusually exciting growth story underneath the surface.

CenterPoint serves the Greater Houston area, and right now Houston is one of the fastest-growing electricity markets in the country. Data centers, industrial expansion, and advanced manufacturing are flooding into the region, and CenterPoint is the utility at the center of it all. The company has a massive capital investment plan in place to meet that demand, raised its outlook, and is delivering consistent earnings growth. That's an eye-catching combination in the normally sleepy utility sector.

Algonquin, by contrast, is a turnaround story. It has made genuine progress by selling off its renewables business, cutting debt, and refocusing on core regulated utility operations. But it's still in recovery mode, and the dividend history gives long-term investors reason to be cautious.

When choosing between a utility in turnaround mode and one riding a genuine growth wave, I'll take the growth.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NRG Energy. The Motley Fool recommends Vistra. The Motley Fool has a disclosure policy.