Pinnacle West Capital

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Last up today is Pinnacle West Capital ( PNW), a $5.9 billion power utility that currently pays out a 3.9% dividend yield. The firm owns the Arizona Public Service company, a regulated utility that provides power to 1.1 million customers. The firm generates around 73% of its power in-house, with 6,340 megawatts of generation capacity.

While Pinnacle's integrated power generation and distribution cuts out middlemen, the firm has heftier exposure to fossil fuels than most, giving it a black mark. That's not an environmental concern but a financial one. Fossil fuel prices continue to tick higher, meaning that PNW isn't truly getting insulation from price swings. That said, the fact that dirt cheap nuclear power is the firm's number-two source helps to offset some of those downsides.

A recent retail rate increase for PNW has helped the firm solidify net profit margins in the double digits, but investors haven't seen a dividend increase since 2006. That disparity makes a dividend hike look likely in the near-term.

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-- Written by Jonas Elmerraji in Baltimore.


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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on

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