10 Dividend Rich, Deal Ready Utility Stocks Ready for a 2012 Jolt

10. Pepco Holdings

Fitch highlights Pepco Holdings (POM) its the largest potential utilities target, with a market cap of $4.5 billion. The Washington, D.C. -based utility transmits, distributes and supplies electricity and natural gas to the Capitol region and the Mid-Atlantic through its Potomac Electric Power Company, Delmarva Power & Light and Atlantic City Electric subsidiaries.

While Pepco Holdings' largest subsidiary is Potomac Electric, which serves electricity to 778,000 Washington, D.C. customers, its other subsidiaries have roughly half a million electricity customers, while Delmarva Power also delivers natural gas to 123,000 customers in Northern Delaware.

The company's stock gained over 11% in 2011, falling slightly below the overall index returns of the Utilities Select Sector SPDR Fund (XLU), which gained over 14% in 2011. Nevertheless, Pepco's 5.51% dividend yield significantly outpaced the Utilities Select Sector ETF's 3.96% yield.

Pepco Holdings is expected to earn 18 cents a share when it reports fourth quarter earnings on Feb. 24, according to Zacks consensus estimates. The company is expected to have revenue of $6.6 billion and net profits of $271 million in 2011, according to Bloomberg consensus estimates. In 2012, those sales and profit numbers are expected to rise to $6.8 billion and $301 million, respectively.

Fitch notes that the company operates in four regulatory jurisdictions, all of which would have to approve any merger or takeover.

Analysts give Pepco Holdings an average price target of $21 a share, an over 7% premium to the company's current share price of $19.6. For more on Pepco's shares, see 6 stocks that will benefit from reverse migration .

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