Diversify any portfolio’s sourcing of cash flow by investing into a rock-solid 3.97% yield.
Get paid $.78 per share next quarter for holding this stock whose dividend has grown for sixteen consecutive years.
This powerhouse electric utility has traded sideways in a consolidating pattern for some time and the dividend yield on offer is high relative to peers.
naphtalina/iStock via Getty Images Consolidated Edison, Inc. ( ED ) offers a $.78 quarterly dividend, a payout to shareholders that has grown for sixteen consecutive years. Give or take 100 million dollars, the company has earned a steady income from operations at an annual rate of $2.5 billion before tax and distributed $1.95 billion. All accomplished while steadily investing to expand the quality and capacity of its electrical properties with expenditures exceeding $3.8 billion in every year of the trailing ten years’ time my data presents. The company goes by the tradename conEdison and we will use conEdison to refer to this utility company.
conEdison was founded in 1823 and enjoys a robust service territory. Their territory includes customers from all walks of life throughout New York, where the company is based. Their territories extend from the Bronx to southeastern New York and northern New Jersey. Economically Active Service Territory
As a result, conEdison has the opportunity to serve residential, commercial, and industrial customers with the benefit of extensive infrastructure to support the region including railways and Atlantic ports, which serve as one of European and other country’s small funnel to a big country. All-in-all, there’s a lot of activity to keep drawing on the company’s investments into the grid. Pro or Con? Heavy Investment Into Assets Weighs On Dividend Growth Rate
The company’s investment into capital assets has exceeded their income for six years straight. These expenditures weigh on their net income figure and don’t seem to be producing incremental gains in revenue nor cash through operations. As a result of the added depreciation expenses on their asset investments and little pricing power, conEdison’s net income has grown just 5% since 2011.
On the upside, the company has expanded its power and other property assets by a book value measuring 196% of their 2011 entry’s value marked at 31.2 billion dollars gross productive assets. This earnings presentation slide shows where the money’s gone to: The bar chart shows the company’s Clean Energy Businesses expenditures since end of year 2015 were a huge 4.3 billion dollars. ESG spending has tapered and it’s time for those assets to earn some cash for the business. That income sans the bulky capital expenditure program will further support what I anticipate will be the dividend’s modest growth over the coming years.
The company is paying out 74% of its net income in dividends so until net income begins to grow in earnest, there’s not likely to be more than token annual dividend growth.
While the financial figures of the business are not giving impressive results lately, I believe their diverse customer base including metropolis, rail, and port may make for a potential home run for investors who require a steady 3.97% yield on invested capital. Heavy ESG Investment Bodes Well For Regulatory Environment
This excerpt from conEdison’s 3rd Quarter earnings release is worth a read, “Our energy systems delivered world class reliability this summer. In response to several storm events and heat waves, our team efficiently restored affected customers and are managing the costs of these efforts,” said Timothy P. Cawley, the President and Chief Executive of Con Edison. “Protecting our customers from climate change makes our forward-looking approach, integrated planning, and robust investments more critical than ever. Meanwhile, we continue to lead the transition to a clean energy future, evidenced during the quarter by our solicitation for large energy storage projects which will allow our customers to maximize the benefits of renewable energy. ” Given the clear benefits of renewable energy for electricity generation compared to crudely combusting fossil fuels or splitting atoms, it is a good thing conEdison has been early on board to the ESG call and went ahead to build out their multi-billion dollars Clean Energy Businesses.
When the time comes that oil is $200 a barrel and carbon is regulated away forever, it will be very expensive indeed to generate power from non-green plants so the more interconnected the regional grid, the more net contribution margin renewables energy generation will be able to capture. How To Lock-In This Steadfast 3.97% Yielder
As the following charts show, conEdison stock’s 30-Day Rolling Volatility of 18.51% is […]