Edison International's Dividend Analysis
Assessing the Sustainability and Growth of Edison International's Dividends
Edison International (NYSE:EIX) recently announced a dividend of $0.78 per share, payable on 2024-04-30, with the ex-dividend date set for 2024-03-27. 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 Edison International's dividend performance and assess its sustainability.
What Does Edison International Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Edison International is the parent company of Southern California Edison, an electric utility that distributes electricity to 5 million customers in a 50,000-square-mile area of Southern California, excluding Los Angeles. Edison Energy owns interests in nonutility businesses that deal in energy-related products and services. In 2014, Edison International sold its wholesale power generation subsidiary Edison Mission Energy out of bankruptcy to NRG Energy.
A Glimpse at Edison International's Dividend History
Edison International has maintained a consistent dividend payment record since 2004, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2003, earning it the title of a dividend achiever, a distinction given to companies that have increased their dividend annually for at least 21 years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Edison International's Dividend Yield and Growth
As of today, Edison International currently has a 12-month trailing dividend yield of 4.32% and a 12-month forward dividend yield of 4.52%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, Edison International's annual dividend growth rate was 5.10%, which decreased to 4.40% per year over a five-year period. Over the past decade, the annual dividends per share growth rate stands at 8.00%. Based on Edison International's dividend yield and five-year growth rate, the 5-year yield on cost of Edison International stock as of today is approximately 5.36%.
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. As of 2023-12-31, Edison International's dividend payout ratio is 1.08, which may suggest that the company's dividend may not be sustainable. However, Edison International's profitability rank, standing at 7 out of 10 as of 2023-12-31, indicates good profitability prospects, with the company reporting net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
A company's growth metrics are crucial for the sustainability of dividends. Edison International's growth rank of 7 out of 10 suggests a good growth trajectory relative to its competitors. The company's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model with an average annual increase of 5.30%. However, this underperforms approximately 64.84% of global competitors. The 3-year EPS growth rate shows that Edison International's earnings have increased by an average of 31.50% per year, outperforming approximately 84.17% of global competitors.
Next Steps
In conclusion, Edison International has demonstrated a solid record of dividend payments and growth, with a notable increase in dividends per share over the past decade. While the current dividend payout ratio raises questions about sustainability, the company's strong profitability rank and earnings growth suggest a positive outlook. Furthermore, the growth rank indicates that Edison International is well-positioned relative to its competitors, despite some areas where it lags behind. Investors should consider these factors in their overall assessment of Edison International's dividend prospects. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize 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.
