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.

This used to be known as Pennsylavania Power & Light Company but changed the name when it no longer reflected the full scope of the company's activities. And now, it's adding more geographic reach. It will buy (subject to regulatory approval) two U.S. utilities of a German company, located in Kentucky. One is Louisville Gas & Electric, the other Kentucky Utilities. Combined, the new acquisition will add 941,000 electric and 321,000 gas users.

To pay for these new customers, PPL will pay $6.7 billion in cash, take on $925 million in tax-exempt debt and receive tax benefits that have a present value of $450 million. PPL doesn't have $6.7 billion in cash lying around (or in the bank). So it's going to issue more stock, more debt, use what cash it has, and maybe sell some assets.

As always, with any utility purchase, there are regulatory bodies that must bless the transaction. In this case there are three states (Kentucky, Tennessee, and Virginia), and the Federal Energy Regulatory Commission. One state, Kentucky, where most of this transaction occurs, is known for rapid review of cases so this deal may be done by December.

However, analysts are positive about earnings, predicting a solid recovery this year. Consensus from 9 analysts is for PPL to show $3.30 a share in 2010, well above the $1.95 reported last year. In 2011, they think earnings will moderate a little to $3.09. The first quarter of this year (ended March 31) showed the improvement expected for the entire four quarters: 75 cents a share in earnings vs 64 cents last year in the first. For the second quarter analysts see 69 cents, more than double the 32 cents of last year's second. Next scheduled earnings announcement is August 5. Most of the increase in earings came from customers paying market rates for the generation part of their bills after a below market rate cap expired in 2009.

As for the dividend, it seems secure, even though in 2009, it took 115% of earnings to pay. This year, that number goes to 42% if the dividend stays at $1.40 (as announced) and earnings hit the $3.30 mark. The next dividend is payable on July 1, if you own the stock by June 10. It will be the 258th consecutive dividend payment. That's 21.5 years straight, four quarter a year, of dividends. They're important at PPL.

More numbers: Market cap is $9.57 billion. Forward P/E is 8.19. Price to sales ratio is 1.16. Price to book is 1.62. Book value is $15.58. Operating margin for the last 12 months was 13.14% while Profit margin was 5.05%. Return on equity was 8.25% and Return on assets was 2.90%. Total cash is $1.72 billion or $4.55 a share. Total debt is $8.24 billion. Current ratio is 1.25. Beta is a mild .43. Over the last 52 weeks, the stock is down 25%. The high was $34.34 on June 2, 2009, the low was $23.75 on May 6, 2010. There are 378.6 million shares outstanding with a Float of 378.37 million. Institutions own 62.50% of the stock, Insiders .03%.

Income investors will need to get comfortable with the new acquisitions and the new world PPL will work in. Going from nonregulatory to a regulatory environment will be a challenge as the company must file price increase requests with various agencies (as it does in Pennsylvania already) in three different states. The synergy of the new purchase isn't apparent but may unfold as efficiencies from administration and other sectors take effect. But earnings are turning since customers have to pay market rates for their utilities. If that keeps up, expect analysts' numbers to be spot on and that dividend to be safe.

- Company Web site: www.ppbweb.com