There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

August 9, 2010 - Avista Corp. (AVA-NYSE) an energy company, engages in the generation, transmission, and distribution of energy and energy-related businesses in the United States and Canada. The company operates through two segments, Avista Utilities and Advantage IQ.

The Advantage IQ division provides utility expense management solutions to assess and manage utility costs and usage to multi-site companies in North America. It offers invoice processing, auditing and payment services, energy procurement, reporting, and advanced analysis, as well as analytical support, reporting, and consulting services. In addition, Avista's other investments and operations include sheet metal fabrication of electronic enclosures, parts, and systems for the computer, telecom, renewable energy, and medical industries; real estate investments, primarily commercial office buildings; and investments in venture capital funds and low income housing. The company was founded in 1889 and is headquartered in Spokane, Washington.

Earnings still managed to grow, in spite of the lower sales. In 2007, they were 72 cents a share, then $1.36, followed by $1.58. This year, consensus from 5 analysts is for $1.58 again, then $1.82 in 2011. Third quarter earnings should be out in October. Expect 9 cents for the period compared to 15 cents in last year's third. For the fourth, look for 50 cents, up from 40 cents last year in the final quarter.

Avista turned in those solid numbers but still underearned its allowed return on equity. The company is filing for rate relief in Idaho and Washington to remedy it. In Washington, management is looking for rate increases of $55.3 million for electric (a 13.8% rise) and $8.5 million (up 5.4%) for gas. In Idaho, the company reached an agreement which bumped electric revenues by $21.26 million (up 9.3%) and $1.85 million (up 2.6%) for gas. Regulatory approval is still pending. Look for the new rates to take effect in Idaho in October, if approved as agreed. In Washington, expect the first quarter of 2011 for implementation. The utility will next file in Oregon for hikes in gas prices and if approved, would be effective sometime in 2011.

Utilities run on the weather, the hotter or colder, the better. In the first quarter of this year, weather was mild in the northwest, giving consumers lower utility bills. Good for them. Not so good for AVA. On top of the weather, hydro conditions were less than normal at the beginning of the year. Then they got better which lowered wholesale prices just when Avista was a net seller of power. That's why this year's earnings should only equal last year's (a few analysts have them going ot $1.63, an improvement of a nickel).

AVA's been raising the dividend since 2002, trying to bring it back to the level of 1998 when it was $1.05 a share. In 2003, it was cut to 48 cents, stayed there for 4 years, then slowly started to improve. For the last 5 years, it's been: 55 cents, 57 cents, 60 cents, 69 cents, 81 cents. This year, it will be $1.00 for a yield of 4.7%. That takes 62% of earnings to pay so it should be considered solid. The stock should go ex-dividend later this month, and the payout would be in the middle of September.

The future looks positive for AVA, if the weather returns to normal. If regulatory approval is given for all the above described cases, profits will grow at a faster rate. And the dividend should as well.

More numbers: Trailing P/E is 13.91 while Forward P/E is 11.77. Price to sales ratio is .78. Price to book is 1.08. Book value is $19.37. Operating margin for the last 12 months was 13.88% and Profit margin was 5.73%. Return on equity was 8.15%, Return on assets was 3.56%. Total debt is $1.27 billion. Current ratio is .84. There are 54.90 million shares outstanding. Institutions own 72.30% of the Float which is 54.44 million.

Conservative investors looking for a stock increasing its dividend will find a lot to like at AVA. It just needs normal weather patterns to be back on track for better growth in earnings. And regulatory approval that allows it to earn its return on equity. Both seem highly probable.

- Company Web site: www.avistacorp.com

- Ted Allrich