From the 1990s into early last decade, the deregulation of electric utilities was all the rage. Proponents argued that it would compel the industry to become more competitive and ratepayers would ultimately face smaller bills. Unfortunately, that experiment failed: Wholesale power generation remained largely uncompetitive and a number of states that once embraced deregulation have gradually abandoned it.

PPL Corp (NYSE: PPL) is a diversified electric utility that initially embraced deregulation, focusing its efforts on building its position in the competitive electricity supply business. As recently as just a few years ago, 75 percent of its revenue was derived from deregulated sources.

But deregulation wasn’t kind to PPL, and it became a chronic laggard in its industry as earnings sagged. After suffering this lackluster experience, PPL reoriented its business model by aggressively acquiring regulated electric utilities over the past three years and transforming itself into a predominantly regulated utility holding company. By early 2014, about three-quarters of earnings will be produced by regulated sources.

While PPL has undeniably undergone a dramatic transformation, it remains a surprisingly diversified business in terms of both operations and geography. In addition to operating electric utilities in Virginia, Kentucky, Pennsylvania and Tennessee, PPL remains active in the domestic wholesale energy business in the Northeast as well as the Northwest. It is also the largest electricity distributor in the United Kingdom, where it enjoys a favorable regulatory environment that allows it to not only grow revenue but also recoup the cost of inflation.

Thanks to these changes, PPL outperformed its sector average in 2011 for the first time in three years and now boasts some of the best operating margins in the business. It’s also generating a strong return on equity (ROE). After dipping to 7.7 percent in 2009, PPL’s ROE now runs at about 14 percent annually.

Despite its improving fundamentals, PPL remains attractively valued relative to its peers. It currently trades at just 10 times trailing 12-month earnings versus an average of 15 times for the overall sector. At the same time, the utility’s two-year average revenue growth is in excess of 16 percent, and management has forecast that it will grow its rate base by about 8 percent annually over the next several years.

That favorable valuation is largely due to the fact that the shift in PPL’s business model has been an expensive process. As of the end of last year, the company had $18 billion in debt outstanding, much of which had been used to fund its acquisitions, pushing its debt-to-equity ratio up to 1.6. That debt burden has also crimped the company’s free cash f low. Although free cash f low averaged $298.9 million over the trailing 10-year period, it was just $20 million last year.

That’s left some investors wondering if PPL will be able to continue covering its generous quarterly dividend of 36 cents per share. However, the company has demonstrated a clear-cut dedication to its dividend by maintaining a consistent payout for more than 60 years. It has also boosted its payout in each of the past 12 years. So while there may be some risk to dividend growth, a cut in the payout seems unlikely, particularly because PPL has just over $1.2 billion in cash on its balance sheet and a strong rate base.

Now is an opportune time for investors to add shares of PPL to their portfolios and enjoy its more than 5 percent yield.