You’ve probably heard people call utility stocks "widow and orphan" investments. The idea is that they’re so safe, so steady, and frankly, so dull that you could just buy them and forget they exist for thirty years. But if you’ve been watching the public service electric and gas company stock (NYSE: PEG) lately, you know that old cliché doesn’t quite fit anymore.
Things are getting weird in the energy sector. In a good way.
As of early 2026, PSEG—the parent company of Public Service Electric and Gas—is sitting in a very strange, very lucrative sweet spot. We aren't just talking about New Jersey residents paying their light bills. We're talking about a massive surge in data center demand, a nuclear fleet that suddenly looks like a gold mine, and a dividend track record that makes most tech companies look like flaky teenagers.
The Data Center Elephant in the Room
Let's be real: Artificial Intelligence is thirsty. Not just for data, but for raw, unadulterated power. This is the part of the story most people missed a couple of years ago.
PSEG recently reported that their backlog of "large load" inquiries—basically big companies asking for massive amounts of power—jumped from 6.4 gigawatts to a staggering 9.4 gigawatts. Most of that is coming from data centers. For context, one gigawatt can power about 750,000 homes. The company is literally being flooded with requests to hook up the digital brains of the future.
This demand gives the public service electric and gas company stock a growth "kinda" profile that you usually don't see in the regulated utility world.
Nuclear is the New Tech
Honestly, the biggest flip in PSEG's narrative has been its nuclear fleet. For a long time, nuclear was the "problem child" of the portfolio. It was expensive to run and faced constant regulatory hurdles.
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Fast forward to 2026.
Because PSEG's nuclear plants provide roughly 90% of New Jersey’s carbon-free electricity, they have become indispensable. The federal Production Tax Credit (PTC) has essentially put a floor under their earnings. It’s like having a government-backed insurance policy that says, "We won't let you lose money because we need your clean energy too much."
Analysts like Jeremy Tonet at JPMorgan and Paul Fremont at Ladenburg have been keeping a close eye on this. Fremont actually upgraded the stock to a "Buy" in early January 2026, citing the valuation and the stability of those nuclear cash flows. When the wind doesn't blow and the sun doesn't shine, those nuclear reactors just keep humming along, minting money for shareholders.
The Dividend: 118 Years and Counting
If you're looking at public service electric and gas company stock, you're probably looking for a paycheck.
PSEG has been paying a dividend since 1907. Think about that. Through two World Wars, the Great Depression, the dot-com bubble, and a global pandemic, they never missed a beat.
- 2025 Dividend: The company bumped the indicative annual rate to $2.52 per share.
- Yield: It typically hovers around 3% to 3.5%, depending on how much the share price is swinging that week.
- Consistency: 2025 marked the 14th consecutive year of annual increases.
CEO Ralph LaRossa has been pretty vocal about keeping this trend going. The company is targeting a 5% to 7% compound annual growth rate in earnings through 2029. It's not "to the moon" growth, but it's the kind of growth that lets you sleep at night.
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Why the Stock Isn't a "Slam Dunk" Just Yet
It wouldn't be fair to just give you the highlight reel. There are some real "sorta" messy parts to the PSEG story.
First, interest rates are the natural enemy of utility stocks. When rates stay high, the cost of borrowing to build all those new power lines and substations goes up. It also makes the dividend yield look less attractive compared to "risk-free" government bonds.
Second, there’s the regulatory "lag." PSEG is planning to spend between $21 billion and $24 billion on infrastructure through 2029. They have to ask the New Jersey Board of Public Utilities (BPU) for permission to raise rates to pay for all that. Sometimes the BPU says yes; sometimes they say, "Not so fast."
Also, while the data center demand is huge, actually building the infrastructure to connect them takes years. You can't just plug a massive AI farm into a standard wall outlet. The "Last Mile" reliability projects and the Gas System Modernization Program (GSMP) are massive undertakings that require a lot of coordination with local governments and labor unions.
Technicals and What Analysts Are Whispering
If you look at the charts, the stock has been a bit of a mixed bag lately. It underperformed slightly in late 2025, dropping about 3% over a three-month period. But it's started to stabilize.
Current price targets from Wall Street are mostly clustered between $83 and $98 per share. Some bulls, like David Arcaro at Morgan Stanley, have even floated targets above $100, driven by that "growth upside" from data centers and the transition to a cleaner grid.
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Is it overvalued?
With a forward P/E ratio sitting around 18.9x, it’s not exactly in the bargain bin. It’s trading right around its 5-year average. You're paying a premium for the fact that 90% of their earnings are regulated and predictable.
The "Green" Factor
New Jersey is pushing for 100% clean energy by 2035. PSEG is basically the engine for that entire state-wide experiment. They are investing heavily in:
- Electric Vehicle (EV) Infrastructure: Setting up the charging grids that will eventually replace gas stations.
- Solar & Storage: Aiming to help NJ hit its goal of 12 GW of solar by 2030.
- Energy Efficiency: Programs that actually pay people to use less energy (which sounds counterintuitive, but it helps the utility avoid building expensive new peak-load plants).
They’ve also secured a five-year extension to run the grid for the Long Island Power Authority (LIPA) through 2030. That provides a nice, steady fee-based income that doesn't depend on how much electricity people actually use.
What You Should Actually Do
If you’re considering public service electric and gas company stock, don't treat it like a lottery ticket. It’s a foundational piece.
Most successful investors use PEG as a defensive anchor. When the tech sector starts sweating over inflation or geopolitical drama, utilities often hold their ground. You buy it for the 118-year-old dividend pedigree and you hold it for the AI-driven power demand.
Actionable Next Steps:
- Watch the February Guidance: PSEG is expected to release its formal 2026 guidance in February. This will be the first real look at how much the data center "backlog" is actually turning into "billable revenue."
- Check the 10-Year Treasury: If you see bond yields spiking, expect some downward pressure on PEG. That’s usually a "buy the dip" opportunity if the company’s fundamentals haven't changed.
- Monitor the BPU: Keep an eye on New Jersey rate case settlements. Any news of "favorable outcomes" is a green light for capital expenditure plans.
- Verify Dividend Dates: If you're chasing the yield, the next major dividend declarations usually happen in February, April, July, and October.
The transition from a "boring utility" to a "clean energy and AI enabler" is well underway. It might not be the flashiest stock in your portfolio, but in a world where everything else feels volatile, a 118-year track record is a pretty good place to start.