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Con Edison’s Total Return Lags behind Peers

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About Consolidated Edison

Consolidated Edison (ED), incorporated in New York in 1997, is one of the largest electric utilities in the United States. It operates through its principal subsidiaries, Consolidated Edison Company of New York and Orange & Rockland Utilities. Consolidated Edison of New York provides electric and gas services to approximately 3.4 million customers in New York. It also operates the largest steam distribution system in the United States. Orange & Rockland provides electric services to 300,000 customers in southeastern New York.

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Consolidated Edison highlights

Consolidated Edison, also known as Con Edison or ConEd, has been one of the favorites of conservative investors due to its solid dividend payment history. ConEd has consistently increased its dividend over the last 41 years. Its average payout ratio for the last five years is 67%. However, its dividend increase hasn’t been very impressive. It has a five-year dividend growth rate of 1.3%.

Regulated operations are the centerpoint of ConEd, as it derives more than 90% of its revenues from them. ConEd’s focus on regulated operations can also be the growth driver for its future performance. ConEd has very little exposure to power generation, while it has maximum exposure to distribution. It mainly procures power from third-party purchase agreements. Currently, ConEd is the sixth largest solar power producer in the United States. It has a total wind and solar (TAN) power generation capacity of 446 megawatts.

Total return comparison

The above chart shows the total return comparison of Consolidated Edison with its peers Edison International (EIX) and PPL (PPL). ConEd is a slow-growing stock, but it offers handsome dividends. ConEd’s total return over the last five years stands at 9.2%. It underperformed the utilities sector (XLU) in the same period. XLU’s total return is 11%. Total return is measured as a total of stock price appreciation and dividends offered by a company during a specific period.

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