Consolidated Edison Inc's Dividend Analysis
Assessing the Sustainability of Consolidated Edison Inc's Dividends
Consolidated Edison Inc(NYSE:ED) recently announced a dividend of $0.81 per share, payable on 2023-12-15, with the ex-dividend date set for 2023-11-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Consolidated Edison Inc's dividend performance and assess its sustainability.
What Does Consolidated Edison Inc Do?
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Con Ed is a holding company for Consolidated Edison of New York, or CECONY, and Orange & Rockland, or O&R. These utilities provide steam, natural gas, and electricity to customers in southeastern New Yorkincluding New York Cityand small parts of New Jersey. The two utilities generate nearly all of Con Ed's earnings following the sale of its clean energy business to RWE in early 2023.
A Glimpse at Consolidated Edison Inc's Dividend History
Consolidated Edison Inc has maintained a consistent dividend payment record since 1975. Dividends are currently distributed on a quarterly basis. Consolidated Edison Inc has increased its dividend each year since 1975. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 48 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Consolidated Edison Inc's Dividend Yield and Growth
As of today, Consolidated Edison Inc currently has a 12-month trailing dividend yield of 3.65% and a 12-month forward dividend yield of 3.68%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Consolidated Edison Inc's annual dividend growth rate was 2.20%. Extended to a five-year horizon, this rate increased to 2.80% per year. And over the past decade, Consolidated Edison Inc's annual dividends per share growth rate stands at 2.90%.
Based on Consolidated Edison Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Consolidated Edison Inc stock as of today is approximately 4.19%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Consolidated Edison Inc's dividend payout ratio is 0.48.
Consolidated Edison Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Consolidated Edison Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Consolidated Edison Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Consolidated Edison Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Consolidated Edison Inc's revenue has increased by approximately 4.90% per year on average, a rate that underperforms approximately 64.68% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Consolidated Edison Inc's earnings increased by approximately 6.40% per year on average, a rate that underperforms approximately 45.25% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 2.00%, which underperforms approximately 58.82% of global competitors.
Next Steps
In conclusion, while Consolidated Edison Inc's dividend payments boast a commendable history and the company maintains a reasonable payout ratio, the growth metrics present a mixed picture. The company's profitability appears solid, but its growth rates, particularly in earnings and EBITDA, suggest that there may be challenges ahead in sustaining long-term dividend growth. Value investors should weigh these factors carefully, considering both the secure history of dividends and the potential for slower growth. Will Consolidated Edison Inc continue to be a reliable source of dividends for investors seeking steady income? Only time will tell. For those interested in expanding their portfolio with dividend-paying stocks, GuruFocus Premium users can explore options using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
