As his latest "Spotlight Income" feature, Roger Conrad looks to El Paso Corp. 4.75 Percent Preferred C (NYSE: EP C). Here's the latest from The Utility Forecaster.

"Ironically, dividends paid by sub-investment-grade utility bonds and preferred stocks were never at much real risk, thanks to solid essential service franchises.

"And with investor fears subsiding, their shares are making up lost ground quickly.

"El Paso Corp 4.75 Percent Preferred C has recovered roughly half of its late-2008 decline of 50% while steadily paying its quarterly dividend of 59.375 cents a share. But the best is yet to come.

"Issuer El Paso Corp. has seen its operating and financial prospects continue to improve, as they have every year since their late 2002 nadir. Energy pipelines and related facilities contribute 80% of earnings, and management will expand them by 40% over the next four years.

"Ninety percent of the additional capacity is already under contracts ranging from 10 to 30 years. The rest of earnings are from producing oil and gas, now hedged through 2011. A rising stream of earnings and cash flow will become a flood if energy prices rebound in coming years.

"That means a possible price-raising credit boost for the preferred. And convertible to common stock, it would score truly monster gains if El Paso’s common stock hits anything close to late 1990s levels. Buy El Paso Corp 4.75 Percent Preferred C up to 40."