Pinnacle West: Underrated Nuclear Play at 3.69% Yield
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- Pinnacle West Capital Corp controls Arizona Public Service, which operates the Palo Verde nuclear plant — the largest and most productive U.S. nuclear facility, running three reactors that produce 32 million megawatt-hours annually for over 4 million homes and businesses.
- APS is pursuing 20-year operating license renewals for Palo Verde and has partnered with Salt River Project and Tucson Electric Power to explore additional nuclear capacity in Arizona, including small modular reactors (SMRs).
- PNW is up only 7.29% over the past 12 months, leaving it with a 3.69% dividend yield — roughly six times the ~0.54% yield of nuclear peer Constellation Energy, whose stock has run up sharply.
- Pinnacle West carries a 71.19% payout ratio, has raised its dividend for five consecutive years, and grew revenue 4.2% in 2025 with an 11.83% net profit margin, though its debt-to-equity ratio sits at 2.
- APS plans to bring the Ironwood Solar Plant in Yuma online this year as part of a clean-energy expansion beyond nuclear.
- Taiwan Semiconductor Manufacturing's Arizona expansion is cited as a long-term power-demand tailwind for Pinnacle West, given Arizona's growing energy needs from the semiconductor buildout.
Why it matters: Pinnacle West's 3.69% dividend yield — more than six times Constellation Energy's 0.54% — gives income investors nuclear and Arizona growth exposure at a discount to peers, while its 71.19% payout ratio and 4.2% revenue growth in 2025 support continued dividend increases, with TSMC's Arizona buildout adding a concrete power-demand driver for Palo Verde's output.
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