Why Consolidated Edison, Inc. (ED) Dividends Are Here to Stay

Page 1 of 2

Consolidated Edison, Inc. (NYSE:ED)Consolidated Edison, Inc. (NYSE:ED) stock has been in the red for the last 12 months, underperforming Mr. Market and its direct competitors. The utility has been hit hard by hurricanes and economic recessions alike, and some investors are wondering whether Con Ed’s dividend is the next to be cut. Here’s what you need to know.

The end of a dividend?
Con Ed’s latest earnings have been a mixed bag. Its Q4 2012 earnings fell $0.04 below analysts’ predictions while Q1 2013′s numbers clocked in $0.04 above expectations. Over the past year, Consolidated Edison, Inc. (NYSE:ED) stock has dropped 8.3%, an embarrassing return compared to the S&P 500‘s 22% profit, and more than 12 percentage points below the Dow Jones U.S. Utilities Index.

3 Reasons Consolidated Edison, Inc. (ED) Stock Dividends Are Here to StayED data by YCharts.

But in the same period, the utility upped its dividend 1.65%, and over the last 10 years has steadily grown its distribution by 9.8%. Its most recent increase stands in stark contrast to two of its competitors, Exelon Corporation (NYSE:EXC) and Atlantic Power Corp (NYSE:AT) . Exelon announced in February that it would be cutting its dividend by 40%, while Atlantic Power Corp (NYSE:AT) gave its own distribution a whopping 66% haircut. Both utilities had overextended themselves, and their dividend reduction paved the way for more frugal and focused financial management.

Currently, Consolidated Edison, Inc. (NYSE:ED) stock sports a substantial 4.3% yield. That’s still lower than Exelon Corporation (NYSE:EXC)’s 6.2% and Atlantic’s 17.9% yield, although Atlantic’s is primarily a result of its 62% drop for 2013. But despite Con Ed’s relatively low yield, there are three reasons its substantial dividend is here to stay.

1. Dabbling in debt
Utilities are capital intensive corporations, and low interest rates have pushed many utilities to take on excessive amounts of debt. While there’s little doubt that extra cash can fuel future earnings, Con Ed has used debt conservatively. Its debt-to-equity ratio clocks in at just 1.01, lower than 60% of its peers. At 0.29, its debt-to-asset ratio tells a similar tale. For Consolidated Edison, Inc. (NYSE:ED) stock, debt is no dividend destroyer.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!