Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

December 17, 2009 - Progress Energy (PGN-NYSE) together with its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in North Carolina, South Carolina, and Florida. It uses coal, oil, hydroelectric, natural gas, and nuclear power resources, as well as various alternative energy resources, including swine waste and other plant or animal sources, solar, hydrogen, biomass, and landfill-gas technologies.

As of December 31, 2008, it had approximately 21,000 megawatts of regulated electric generation capacity and served approximately 3.1 million retail electric customers, as well as other load-serving entities. Progress Energy, Inc. was formerly known as CP&L Energy, Inc. The company was founded in 1925 and is headquartered in Raleigh, North Carolina.

This is a company designed for income investors. Dividends are a priority for PGN. Management increased them for 21 years. Going forward the increases may be small as dividends could take more of earnings as profit growth may slow. But with a current pay out of $2.48 and a yield close to 6%, income investors should find this one of interest.

Earnings are growing. In 2006, they were $2.05, then $2.69, followed by $2.96. This year, the consensus from 8 analysts is for $3.05, and $3.18 for 2010. Quarterly earnings will be out on February 11, 2010. Look for 52 cents a share, up from 47 cents in the fourth quarter of last year. First quarter earnings are currently estimated at 63 cents a share, down from 66 cents in the first period this year.

The third quarter was positive but only a little better than the third quarter of last year. Earnings were $1.22, up from $1.18. Revenues were up 5%, year over year. There was some base-relief and good returns on nuclear and environmental investments as well as lower costs for maintenance and operations. But new clients growth was lower. And the company issued 14.4 million common shares last January which had to have their fair share of profits and dividends.

PGN has a Smart Grid that was recently given $200 million from the federal government to aid in building the program. The government allocated $3.4 billion for a nationwide effort to upgrade the power grid for better efficiencies. PGN will split its grant between Florida and Carolina.

The company has filed for rate relief in Florida. A decision was thought to be forthcoming in November but has been stalled until January. Total relief was for almost $500 million. The company needs to replace a generator at its Crystal River 3, a repowering project for its Bartow plant, and additional investments for upgrading transmission projects.

More numbers: Market Cap is $11.47 billion. Trailing P/E is 16 while the Forward P/E is 13. Price to Sales is 1.18. Price to Book is 1.23. Book Value is $33.75. Operating margin for the last 12 months was 18.44% while the Profit margin was 7.29%. Return on Equity was 9.04%. There's cash of $157 million. Current ratio is 1.11. Total debt is $11.98 billion. Total revenues in 2009 will be $9.9 billion, up from $9.17 billion. Beta is a very mild .38. The 52 week low was hit on March 9 at $31.35. The 52 week high was $42.20 on December 14, 2009. There are 278 million shares outstanding. Institutions own 57.7% of them. The dividend is $2.48 or 62 cents a quarter for a yield of 5.9%.

Income investors will find this a stock worthy of their time, especially if they are already invested in utilities. The average yield for all utilities is 4.8%. PGN is well above it.

- Company Web site: www.progress-energy.com

Ted Allrich