Power-generation and utilities major Exelon(EXC) - Get Report is a great income play, with its above-average dividend yield of 3.6%.

Even as U.S. interest rates rise and investors begin scanning the terrain for a possible 'safe-haven', utilities offer a compelling investment opportunity.

Having said that, the utility sector was the Standard & Poor's 500 second-best performer leading up to Election Day on Nov. 7. Performance metrics since then have been patchy at best for the sector, with the focus on Trump's vision for an infrastructure overhaul coupled with a slew of corporate tax rate cuts.

Given that growth expectations have now tempered, it's an opportune moment to get into utilities like Exelon. The company is deeply entrenched across the segment in power generation, competitive energy sales, transmission, and delivery.

A possible reason why Exelon's shares, despite having grown from $18.9 billion to over $31 billion over the last decade, haven't moved much is the absence of a simultaneous profit ascent.

The stock's movements have been largely ordinary over the past five. By comparison, peers like PG&E Corp(PCG) - Get Report and Consolidated Edison(ED) - Get Report have had better numbers to show.

We believe Exelon's time is yet to come, which makes it important for investors to hold onto its robust yield and ignore its stock price potential.

As Exelon works towards achieving higher profits, a clutch of factors stand out.

Already among the leading zero-carbon nuclear energy providers, Exelon's subsidiaries serve 10 million electric and natural gas utility customers. The company's Constellation business serves around 2 million residential, public sector and business customers, creating a stable revenue source. With 32,700 megawatts of total power generation, including 19,500 megawatts of nuclear generation, Exelon's ability to mount a revival is unquestionable.

Exelon's profit focus initiative is hinged on two primary pillars. First up is a plan to spend considerably less on utilities and produce considerably more revenue over the next four years.

Second, power generation will perform substantially better in the wake of Exelon's rapidly-changing nuclear operations.

Concerns over declining gas and power prices as well as worries over its recently acquired Pepco utilities have been over-blown.

Experts now suggest that a mixture of declining capital expenditure, and enhanced gross margins will drive nearly $7 billion in free cash flow generation at Exelon between this year and 2020.

A portion of this massive cash war chest can be used to cut debt across the larger Exelon umbrella - while portions may be utilized to purchase faster growth.

Plus, legislative support for nuclear power plants, lower corporate taxes under a federal tax restructuring, better commodities' prices, and improving allowed returns will boost the company's attractiveness according to Morgan Stanley experts.

Currently, Exelon's earnings growth for the next 5 years isn't that great. This is why investors must buy the stock for the dividend, to gain from the 3.6% yield and less than 50% payout ratio, indicating that the company is likely to boost its dividend in the future).

Remember, among diversified utilities, Exelon's dividend yield is way ahead of peers like Cosan(CZZ) - Get Report , UGI Corp(UGI) - Get Report , MGEEnergy(MGEE) - Get Report and PG&E Corp.

Exelon is an attractive growth-driver that currently sports a hefty dividend.


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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.