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Edison International Declares 13% Hike in Quarterly Dividend

Zacks Equity Research

The board of directors of Edison International EIX has approved a 13% increase in its quarterly dividend rate. The revised dividend of 54.25 cents per share will be distributed on Jan 31, 2017 to shareholders of record at the close of business on Dec 30, 2016.

The latest hike marks an increase of 6.25 cents from the prior payout of 48 cents per share. The new annualized dividend amounts to $2.17 per share, up from $1.92 paid earlier, resulting in a dividend yield of 3.13%.

Notably, this is the 13th consecutive year of a dividend hike by Edison’s management.

Solid Asset Portfolio & Operating Profile

With a strong portfolio of regulated utility assets and well-managed merchant energy operations, Edison presents a lower risk profile than its utility-only peers. In addition, the company boasts a solid financial position backed by a strong cash generation capacity. As of Sep 30, 2016, Edison International had cash and cash equivalents of $84 million. In addition, the company continues to show efficiency in terms of reporting a stable cash inflow through operating activities. The company’s cash flow from operating activities in the first nine months of 2016 was $2,500 million.

A stable financial position enables Edison International to maximize shareholder value through the payment of regular dividends and repurchase of shares. Moreover, the company is on track to achieve the targeted payout ratio of 45–55% of its subsidiary Southern California Edison’s earnings. These initiatives will allow the company to retain investor interest in the stock.

Price Movement                                                                                  

Edison has outperformed the Zacks categorized Utility-Electric Power industry over the last 12 months. Share price of Edison surged 17.9% during this time frame, compared with the industry’s gain of 7.8%.

Dividend growth prospects, a constructive regulatory environment, and no equity requirements are fuelling investor interest in the stock and in turn, its price.

Zacks Rank & Key Picks

Edison carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Avista Corp. AVA, Ameren Corporation AEE and DTE Energy Company DTE.

Avista has seen one upward estimate revision for 2016 over the last 60 days. During this period, its estimates increased from $2.08 to $2.09. The stock carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren Corp., another Zacks Rank #2 stock, has seen five upward estimate revisions for 2016 over the last 60 days. During this period, its estimates increased 6.7% from $2.53 to $2.70.

DTE Energy has seen three upward estimate revisions for 2016 over the last 60 days. DTE Energy carries a Zacks Rank #2 as well. During this time frame, its estimates were up 2.1% from $5.16 to $5.27.

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