Currently, Edison International (EIX) offers a dividend yield of 4.3%, which is much higher than its five-year average. Sempra Energy (SRE) is trading at a yield of 3.1%, while broader utilities yield ~3.3%. Sempra Energy’s relatively stable yield implies a stable dividend profile. Edison International’s dividend yield was less stable after its stock fell due to the wildfires.
In the last five years, Sempra Energy raised its dividend more than 7% compounded annually. On average, utilities (XLU) managed to grow their dividends ~4% during the same period. Edison International’s five-year dividend growth rate was more than 12%.
Edison International has increased its dividend for 15 consecutive years. The utility’s dividend increase of 1.3% in December, compared to the previous quarter, was much lower than its historical growth. Sempra Energy’s 2018 dividends increased for the eighth consecutive year.
Sempra Energy’s payout ratio for the last fiscal year was 73%, while Edison International’s payout ratio was 71%. The payout ratio is the portion of profit a company gives to shareholders in the form of dividends. Sempra Energy aims for a dividend per share increase of 8%–9% through 2020. The utility’s expected superior earnings growth for the next few years could continue to fuel above-average dividend growth.