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.

The Competitive Energy division is in the competitive generation, marketing, and supply of electricity and natural gas; and provision of related energy management services primarily in the mid-Atlantic region. It provides wholesale electric power, capacity, and ancillary services in the wholesale markets and supplies electricity to other wholesale market participants under long and short-term bilateral contracts.

This division owned and operated mid-merit plants with a combined 2,250 megawatts (MW) of capacity, peak-load plants with a combined 722 MW of capacity, and base-load generating plants with a combined 340 MW of capacity. It also provides energy savings performance contracting services to federal, state, and local government customers, as well as retail energy supply services to commercial, industrial, and government customers; and designs,constructs, and operates combined heat and power plants, and central energy plants. In addition, this division offers high and low voltage electric construction and maintenance services; and street light construction and asset management services to utilities, municipalities, and other customers in the Washington, D.C. area. Further, it owned 3 land fill gas-fired electricity plants with a total generating capacity of 10 MW. The company was founded in 1896 and is based in Washington, District of Columbia.

2009 was a tough year for Pepco. Earnings finished at 91 cents a share, down from $1.93 in 2008. Analysts see a rebound this year, however, and 10 of them have a consensus estimate of $1.28, then next year $1.42. The poor results of last year came from weak energy markets, an accounting change on certain mark to market transactions and one $20 million market transaction that didn't happen. As the analysts' estimates suggest, these events won't be recurring.

To help increase earnings, the company filed for a rate increase in Maryland, a total of $40 million to recover distribution related costs. A ruling from the regulatory body is expected in July. While the company waits for Maryland to rule, it has 3 more cases pending, each with a final ruling this year. If the company is granted the rate changes, earnings estimates may be raised.

There's a big project waiting in the wings at POM. It's a large transmission line. Management recently requested a delay because it needs more time to evaluate power needs in the region. Most likely management is trying to determine if weak demand will continue and if so, how large the project should be. Capital spending on the line for 2010 will go from $136 million to $24 million while re-evaluation continues.

The story here is about the dividend. It's $1.08 a year, the same as it was for the last 2. Yield is 6.4%. The payout currently takes more than the earnings but that shouldn't be the case this year as earnings will eclipse the dividend by 20 cents if the analysts' estimates are right. Ex-dividend date was March 8. Dividend date will be March 30.

More numbers: Market Cap is $3.77 billion. Trailing P/E is 16 but Forward P/E is 12. Price to sales ratio is .41. Price to book is .88. Book value is $19.15. Operating margin for the last 12 months was 7.12%. Profit margin was 2.54%. Return on equity was 5.57%. Total debt is $6.02 billion. Beta is a very defensive .6.

That last number should hold some interest for income investors. Volatility is very low for POM. While it got knocked down with the rest of the market last year, hitting a low of $10.10 before rebounding, this stock should be relatively stable going forward, especially if the new rates are granted. While there is no one catalyst expected to make the stock move ahead dramatically, there is nothing to suggest earnings will be hit hard again, as they were in 2009, to hurt the stock.

- Company Web site: www.pepcoholdings.com