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Better Buy: FirstEnergy Corp. (FE) or Consolidated Edison, Inc. (ED)?

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Investors might invest in a good company with solid returns — but is it the place where their hard-earned profits are best spent? Let’s compare big dividend-dealing utilities FirstEnergy Corp. (NYSE:FE) and Consolidated Edison, Inc. (NYSE:ED), to see where we should stash our cash.

FirstEnergy Corp. (NYSE:FE)

The earnings
Sales are a good place to start for these two companies, because up until 2011, they were mirror images of each other. But in 2011, FirstEnergy Corp. (NYSE:FE) merged with Allegheny Energy, a 1.6 million customer utility that doubled FirstEnergy’s “clean coal” capacity. The top line grew accordingly, while Consolidated Edison, Inc. (NYSE:ED) stock revenue slumped. In the past five years, FirstEnergy Corp. (NYSE:FE) sales are up 12.3%, while Con Ed’s have taken a 10.3% dip.

FE Revenue Annual Chart

FE Revenue Annual data by YCharts

But where it matters to most to investors, FirstEnergy Corp. (NYSE:FE) comes in second for adjusted earnings per share. FirstEnergy’s adjusted EPS has fallen a whopping 60% over the past five years, but Consolidated Edison, Inc. (NYSE:ED) stock adjusted EPS is still in the red at -11.7%.

FE EPS Diluted Annual Chart

FE EPS Diluted Annual data by YCharts

The dividend
Currently, FirstEnergy Corp. (NYSE:FE) shareholders enjoy a 5.9% yield on their shares, a highly respectable rate. But digging deeper, we find that much of that increasing yield has come from a slumping stock price. Consolidated Edison, Inc. (NYSE:ED) stock offers a still substantial 4.2% yield, and its stock has risen 52% in the same period that FirstEnergy’s has fallen 53%.

FE Chart

FE data by YCharts

In absolute terms, FirstEnergy Corp. (NYSE:FE)’s distributions have stayed flat over the past five years, while Consolidated Edison, Inc. (NYSE:ED) stock has bumped its dividends up a slight 5.1%.  These dividend stalwarts stand in stark contrast to the likes of Exelon Corporation (NYSE:EXC) and Atlantic Power Corp (NYSE:AT), both of which went in for a dividend haircut this year.

Exelon Corporation (NYSE:EXC) dropped its distribution a whopping 40% as it looks to keep in investor credit rating squeaky clean and balance its books. “We have an opportunity to invest in growth,” said Exelon Corporation (NYSE:EXC) CEO Chris Cane during the company’s Q4 earning call. “We cannot do that efficiently if we’re leaning on a balance sheet to maintain an 80% to 90% payout level.”

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