UBS has named three European utilities companies as preferred picks in the sector, basing its selections on a combination of macroeconomic, structural and company-specific fundamentals. The recommendations appear in UBS's Equity Compass analysis, which the bank says focuses on transformational opportunities in power and resources that it expects to shape markets over the coming decade.
The three companies highlighted by UBS are Engie, RWE and Veolia Environnement. UBS pointed to a mix of growth trajectories, defensive business characteristics and valuation metrics that it views as attractive relative to peers.
How UBS framed the choices
UBS's Equity Compass evaluates companies across macro, structural and company fundamentals. In this instance the bank emphasized exposure to renewable energy development, targeted infrastructure investment, and environmental service offerings as core attributes driving its sector preferences.
Engie - large renewable and regulated footprint
Engie is described as an integrated global utility with operations in 30 countries and substantial exposure to French gas networks. UBS noted the company has 103 GW of renewable and flexible power capacity on its books.
Engie has set a growth investment envelope of EUR 34-38 billion for the 2026-2028 period, with roughly 90% of that commitment earmarked for renewables, batteries and infrastructure. Management is targeting an expansion of renewable and storage capacity from 57 GW in 2025 to 95 GW by 2030. In May 2026 the company completed the acquisition of UK Power Networks at an enterprise value of GBP 15.8 billion.
By 2028 Engie aims to derive two-thirds of its EBIT from regulated and long-term contracted activities. UBS also highlighted valuation and income characteristics, noting shares trade at a material discount to peers on price-to-earnings and dividend yield metrics. Engie's dividend policy targets a payout ratio of 65-75% with a minimum dividend of EUR 1.1 per share.
RWE - renewable development and buyback program
RWE is presented as a utility that has repositioned itself as a leading renewable developer. The company plans to invest EUR 35 billion between 2025 and 2030 with a focus on offshore wind, onshore wind, solar, batteries, flexible generation and hydrogen.
UBS noted RWE currently has 12.5 GW of capacity under construction. This pipeline is expected to increase the company's renewables and flexible generation portfolio from about 38 GW to roughly 50 GW. RWE has set EPS growth targets of an 18% compound annual growth rate for 2025-27 and 12% for 2026-31.
Separately, RWE announced in November 2024 a program to repurchase EUR 1.5 billion of its own shares through to the second quarter of 2026, representing approximately 6-7% of current market capitalisation, according to UBS's summary.
Veolia Environnement - scale in environmental services
Veolia operates across water, waste and energy service segments. UBS highlighted the company's operational scale: in 2025 Veolia provided drinking water to 110 million people and wastewater services to 97 million, produced 45 TWh of energy and treated 64 million metric tonnes of waste.
Management targets around 5-6% organic EBITDA growth annually, with an EBITDA goal of approximately EUR 8 billion by 2027. UBS observed that Veolia's shares trade close to the low end of their historical valuation range.
Bottom line
UBS's Equity Compass selects Engie, RWE and Veolia as sector picks on the basis of their strategic exposure to renewables, infrastructure and environmental services, and on metrics such as planned investment, capacity build-out, earnings growth targets and shareholder-return programs. UBS also cites relative valuation and dividend policies as part of the investment case for the three names.