Updated 3/13/25
Pinnacle West Capital Corporation doesn’t often steal the headlines—but maybe that’s part of its appeal. If you’re a dividend-focused investor looking for steady income from a company that does something essential without chasing fads, PNW is worth knowing.
Based in Phoenix, Arizona, Pinnacle West is the parent company of Arizona Public Service (APS), the state’s largest electric utility. They provide electricity to more than 1.3 million people, mostly across central and northern Arizona. As a regulated utility, their operations are grounded in long-term planning, stable demand, and a predictable business model—exactly the type of setup that tends to support dependable dividend payouts over time.
Let’s break down what’s been happening with PNW and what income-focused investors should consider right now.
Recent Events
In a year when many stocks moved sideways, Pinnacle West managed a near 30% gain. Not what you’d expect from a slow-moving utility, but this jump reflects a bit of catch-up after some earlier headwinds.
A while back, the Arizona Corporation Commission blocked a proposed rate hike, which cast a shadow over PNW’s profit outlook. Utilities depend heavily on those rate approvals to offset their infrastructure investments, so when things don’t go as planned, investors tend to back off. That’s what happened here. But more recently, the regulatory tone seems to be improving, and the company is back on stronger footing.
Pinnacle West’s recent financial performance supports that view. Revenue has grown over 10% year-over-year, and net income for the last twelve months hit just over $608 million. Earnings per share came in at $5.24—plenty to cover the current dividend. Even though free cash flow was negative, operating cash flow remained strong, signaling that the core business is still generating consistent income.
Key Dividend Metrics
💰 Forward Yield: 3.82%
📆 Next Dividend Pay Date: March 3, 2025
📤 Annual Dividend: $3.58 per share
🧾 Payout Ratio: 67.5%
📉 Ex-Dividend Date: February 3, 2025
📊 5-Year Average Yield: 4.39%
Dividend Overview
PNW’s dividend yield right now sits at 3.82%, which is solid even if it’s a touch lower than its five-year average. That drop is mostly due to the share price climbing higher—always a good problem to have if you’re already holding the stock.
The company pays out $3.58 annually, and they’ve made it a habit to raise the dividend gradually over time. You won’t get big increases year after year, but you’re also unlikely to see a cut. That kind of quiet dependability is what makes utility stocks like this a staple in many income portfolios.
Dividend Growth and Safety
While the dividend increases are modest, they’ve been consistent. For more than ten years, PNW has delivered annual raises, reflecting a management team that understands the importance of rewarding long-term shareholders.
The current payout ratio of about 67% falls right in the comfort zone for a utility. That means there’s room for the dividend to keep growing at a measured pace. Even with capital-intensive projects underway and a recent dip into negative free cash flow, the strong operating cash numbers show the company has the resources to support the dividend.
Still, it’s worth watching how future investments get funded. If cash flows remain under pressure or if debt levels continue to climb, that could affect how quickly the dividend grows from here.
Chart Analysis
Price Action and Trend Structure
Looking at Pinnacle West (PNW)’s chart, the overall structure has transitioned into a clear uptrend since late spring of last year. The price action shows a solid rally starting around mid-May, with steady higher highs and higher lows leading into the summer. A noticeable surge in momentum took place in late July, where the stock accelerated past both its 50-day and 200-day moving averages with conviction, backed by a strong volume spike. That was a key signal that market sentiment had shifted more decisively in favor of the bulls.
After peaking near $95 in September, the stock cooled off and began a sideways phase with modest pullbacks. It briefly lost the 50-day moving average during October and early November, but the 200-day acted as strong support, with buyers stepping in each time price neared that level.
What’s notable is the most recent move starting in January. The stock regained its 50-day average and has remained above it since, showing renewed strength. The last couple of months reflect a constructive re-accumulation pattern rather than distribution—there’s been no major selling volume, and price dips have been shallow.
Moving Averages
The 50-day moving average is currently sloping upward again and has crossed above the 200-day average, forming a golden cross back in late February. This crossover adds to the bullish tone and typically signals the potential for continued strength in the medium term.
The 200-day moving average itself has flattened out but is beginning to curl up slightly, suggesting the longer-term trend is stabilizing after last year’s choppiness.
Volume Analysis
Volume has been relatively muted in recent sessions but was more pronounced during key turning points. Back in June and late September, volume spikes corresponded with price rallies. This kind of action indicates that institutional players were likely active during those accumulation phases.
Interestingly, the pullbacks in late October and again in late December didn’t bring aggressive volume on the downside—suggesting selling pressure wasn’t dominant even during price weakness.
More recently, the volume has trended below average, which isn’t uncommon as price consolidates gains. Still, it would be worth watching for a renewed volume surge if the stock makes a new high above $95.
RSI and Momentum
The RSI has been tracking above the midpoint since January, staying mostly between 60 and 75. That’s a healthy zone during uptrends, showing momentum is tilted toward buyers without being overheated.
In early March, the RSI did slip slightly below 70 after touching overbought territory in late February. That’s not unusual—this kind of brief dip in RSI while the price holds steady usually suggests a pause in the rally rather than a breakdown.
Latest 5 Candles and What They Reveal
Looking at the last five candles, they show a short-term pullback with mild selling pressure. The candles have small real bodies and relatively balanced wicks, which reflects some indecision after the recent run. Notably, none of the candles indicate aggressive selling—there are no large red bodies or heavy downside volume.
The latest candle closed slightly higher at 91.23 after opening at 90.55 and hitting a low of 90.12. The long lower wick on this most recent bar suggests buyers stepped in after an early dip, which is often a positive intraday signal. The range was tight, but the close was near the top, reinforcing that support is holding for now.
Analyst Ratings
📈 Pinnacle West Capital Corporation (PNW) has been catching some renewed attention from Wall Street, with a mix of upgrades and cautionary shifts that reflect a changing outlook on the company’s trajectory.
🔼 Back in December, KeyCorp raised its stance on the stock, moving it from a neutral “sector weight” to a more bullish “overweight” rating. Along with the upgrade, they set a fresh price target of $101.00. Their rationale was tied to a more constructive regulatory climate in Arizona and improving financial metrics, particularly as the company navigates past the headwinds that weighed it down in the prior year.
🔽 On the flip side, Barclays took a more cautious stance in November, downgrading PNW from “overweight” to “equal weight.” They also trimmed their price target slightly, bringing it down from $93.00 to $91.00. The move was based on ongoing concerns tied to rate case outcomes and the potential for margin compression if regulatory approvals don’t come through as expected.
💬 As of now, the consensus analyst rating sits in the “Moderate Buy” category. The average 12-month price target is around $95.17, suggesting some room for upside from current levels. The targets themselves are spread across a range—on the low end, $83.50, and at the high end, a more optimistic $104.00. That kind of spread shows that while there’s cautious optimism, analysts still see possible bumps in the road.
📊 The mix of upgrades and downgrades over the past few months seems to reflect the push and pull between PNW’s solid fundamentals and the lingering regulatory uncertainty that can be tough to forecast. But overall, analyst sentiment has turned slightly more favorable compared to earlier in the cycle.
Earning Report Summary
Pinnacle West Capital wrapped up 2024 on a strong note, showing some solid progress across the board. For the full year, the company pulled in $608.8 million in net income, or $5.24 per diluted share. That’s a healthy bump from the previous year, where earnings came in at $4.41 per share. A few key drivers were at play here, most notably the rollout of new customer rates and a noticeable uptick in retail sales, which jumped about 5.7%.
Weather played a role too. A scorching Arizona summer led to higher energy usage, giving a lift to revenue during the hot months. On top of that, Pinnacle West continued to grow its customer base, adding roughly 2.1% more accounts over the year. For a utility, that kind of customer growth helps reinforce long-term revenue visibility.
Now, not everything was smooth sailing. The fourth quarter came in a bit soft, with the company reporting a small net loss of $6.8 million, or $0.06 per share. That’s a step back from the same time last year, but still not something to lose sleep over. The dip mostly came from seasonal patterns and some higher operating costs late in the year.
One area where the company continues to shine is at Palo Verde, the nuclear plant that’s been quietly cranking out reliable power for decades. In 2024, the plant hit a 93.7% capacity factor. That’s a strong performance, and it marked the 16th year in a row the three-unit facility generated more than 30 million megawatt-hours. For a company that banks on consistency, those are numbers worth highlighting.
Looking ahead, Pinnacle West is thinking big. Between 2025 and 2028, they’re planning to bring nearly 10,000 megawatts of new capacity online. Most of that will come from renewables, battery storage, and some natural gas. Interestingly, more than 90% of that future capacity is expected to be carbon-free, which lines up nicely with the broader clean energy trend that’s reshaping the utility landscape.
All in all, the full-year report painted a picture of a utility that’s not just holding its ground, but also positioning itself for the future. Even with a few bumps in the road, Pinnacle West seems to be making the right moves to keep pace with demand while leaning into cleaner, smarter energy solutions.
Financial Health and Stability
Pinnacle West does carry a hefty debt load—just over $11 billion at last count. That brings the debt-to-equity ratio up to 161%, which is a bit high even by utility standards. It’s not necessarily a red flag, but it does mean the company has less wiggle room if interest rates stay elevated for an extended period.
Their current ratio is below 1, which tells us short-term liabilities are higher than liquid assets. Again, that’s not unusual for utilities, which tend to invest heavily in long-term projects rather than sit on large cash reserves.
Profitability is decent. Net margins are just under 12%, and return on equity is close to 10%. Those aren’t explosive numbers, but they’re in line with what you’d expect from a regulated utility that isn’t chasing fast growth.
Valuation and Stock Performance
At around $93.60 per share, PNW isn’t exactly cheap, especially for a utility. The stock is trading at nearly 18 times trailing earnings and over 20 times forward earnings. That’s a slight premium to where it’s historically traded and a bit higher than the sector average.
The PEG ratio of 3.29 suggests that future growth is expected to be on the slower side, which makes sense given the company’s business model and recent regulatory challenges.
Still, the price action has been strong. The stock is trading above both its 50-day and 200-day moving averages, and the 52-week range—$70.72 to $95.42—shows just how far it’s come. With a beta of 0.53, it’s also less volatile than the broader market, making it a relatively smooth ride for income investors.
Risks and Considerations
The biggest thing to keep an eye on with Pinnacle West is its relationship with regulators. The company doesn’t control its own pricing power the way most businesses do—it has to ask permission to raise rates. When those requests get denied, it puts pressure on margins and future returns.
Debt is another issue. While utilities can usually carry more leverage than other industries, rising interest rates could eventually bite into profits or limit the company’s ability to invest in infrastructure.
Also, the negative free cash flow from the past year is worth monitoring. While it’s not unusual for capital-intensive businesses to swing into negative territory occasionally, it becomes a concern if it turns into a trend.
Lastly, environmental and regional pressures are mounting. Arizona’s climate, growth, and energy demands are changing fast. That could mean more investment is needed to maintain reliability and meet state mandates, which again brings us back to the importance of regulatory approvals.
Final Thoughts
Pinnacle West Capital might not be the most exciting name in the stock market, but that’s not what income investors are looking for. What PNW offers is consistency, predictability, and a dividend that’s been there year after year—growing, if slowly, but growing nonetheless.
The recent bounce in share price has pushed the yield slightly below its average, but the overall picture remains attractive for those seeking a steady payout from a regulated utility. With a reliable business model, a long-term dividend track record, and a low-volatility profile, PNW earns its place in a diversified dividend portfolio.
It’s a classic case of slow and steady—exactly what many dividend investors are after.