Important news for shareholders and potential investors in Consolidated Edison Inc (NYSE:ED): The dividend payment of US$0.71 per share will be distributed into shareholder on 17 September 2018, and the stock will begin trading ex-dividend at an earlier date, 14 August 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Consolidated Edison’s most recent financial data to examine its dividend characteristics in more detail.
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does Consolidated Edison fare?
The current trailing twelve-month payout ratio for the stock is 55.16%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect ED’s payout to increase to 66.08% of its earnings, which leads to a dividend yield of around 3.76%. However, EPS is forecasted to fall to $4.38 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of ED it has increased its DPS from $2.34 to $2.86 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes ED a true dividend rockstar.
Compared to its peers, Consolidated Edison generates a yield of 3.62%, which is on the low-side for Integrated Utilities stocks.
Taking into account the dividend metrics, Consolidated Edison ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for ED’s future growth? Take a look at our free research report of analyst consensus for ED’s outlook.
- Historical Performance: What has ED’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.