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It's been a tough couple of months for Exelon Corp. (NYSE:EXC) shareholders. Normally, a major utility stock would be suitable for more conservative investors who want stability and consistent income through dividends, but Exelon shares have been a roller coaster ride lately for a couple of reasons. This stock was regularly trading around $36 per share for most of 2012, and it has recently dropped even below $30.

In early November, the CEO announced that the company needs to consider a cut in the dividend in order to maintain its investment grade credit rating. This put significant pressure on the stock and it was further exacerbated by a post-election sell-off whereby many dividend stocks declined over concerns that tax rates on dividend income would jump due to the oncoming Fiscal Cliff.

Exelon is one of the largest utilities in the United States with about 35,000 megawatts of power generation capacity. It generates power from a range of sources such as natural gas and nuclear and it serves millions of customers in states like Maryland, Illinois, Pennsylvania and others. Exelon recently reported solid financial results recently, as noted in Seeking Alpha's earnings call transcript which stated:

The third quarter financial performance was very strong for Exelon, particularly at ExGen. We reported operating earnings per share of $0.77, which was well above the midpoint of our guidance range for the quarter. Based on our financial performance to date, we are revising our 2012 full year earning guidance range to $2.75 to $2.95 per share.

The recent sell-off seems overdone and this could be a solid buying opportunity. One reason for this is that the stock appears to have bottomed out and it has even started to climb up from recent lows. Another reason is that the shares have already made an adjustment from about $36 to just about $30 for the news of a dividend cut. It also trades well below the 52-week high of about $43.

While there is still uncertainty as to the level of the dividend cut, by looking at earnings estimates for 2013, it still seems likely that this company will be able to pay a healthy yield. For example, if the company earns about $2.55 per share and pays out about 70% of its earnings (which is in the average range for a utility) or about $1.80 per share in the form of a dividend, it would still yield over 5% based on a $30 share price.

Another reason to buy now is because seasonal tax-loss selling is probably putting above-average selling pressure on these shares. Since Exelon is trading near 52-week lows, it is likely that some shareholders are dumping this stock now in order to harvest tax-losses before the end of 2012. That means this stock could be poised to rebound into early January in a relief rally, as tax loss selling ends on December 31.

After the recent sell-off in this stock, it has now stabilized and as a utility, it is still poised to offer above-average yields over the long-term. Investors who buy on dips now might be getting an opportunity to see some capital gains in January as the selling pressure from tax-loss selling fades in the next couple of weeks.

Here are some key points for EXC:
Current share price: $30
The 52 week range is $28.40 to $43.91
Earnings estimates for 2012: $2.85 per share
Earnings estimates for 2013: $2.55 per share
Annual dividend: $2.10 per share which yields 7.1% (But a dividend cut
could reduce the yield)

Data is sourced from Yahoo Finance.

Source: Buy Exelon Now For Yield And A Potential Rebound In January