Consolidated Edison (ED),which has been around for more than 180 years, has an enviable market position for a utility. It provides electricity, natural gas, and steam service to 4.8 million customers in New York City and surrounding areas. That market is pretty much guaranteed to provide Con Ed a solid customer base for years to come.
Almost all of the company’s earnings come from its regulated side. Con Ed has been successful in convincing regulators to approve the rate increases it needs to thrive.
In addition to its solid financial performance, the company offers a tasty dividend yield that recently stood at 4.6 percent. The dividend has increased in each of the last 37 years, and that streak is likely to continue. So Con Ed stock fits the bill as a safe, income-producing investment.
Con Ed’s profit soared 38 percent in the first quarter to $311 million from $226 million a year earlier. Rate increases and profitable hedging fueled the gain. Revenue dipped 3.3 percent to $3.35 billion.
The company can look forward to a solid future, say analysts. Standard & Poor’s Justin McCann expects earnings per share to climb about 2 percent this year. Rate increases and a gradual recovery in New York City’s economy will provide support, he writes.
McCann looks for the stock to provide a total return in the high single digits for the 12 months ending next February. “We believe the shares will be supported by a dividend yield that is above the industry average,” he writes. “We expect the dividend to continue to be increased at an annual rate of slightly less than 1 percent.”
Analysts at Zacks Investment Research are impressed with Con Ed’s Smart Grid technologies and energy efficiency programs. “These efforts will enhance system performance and provide energy savings for businesses and residential customers,” Zacks analysts write.
“The company plans to make capital investments of $2.1 billion in 2011. Additionally, the company is progressing on the regulatory front with its rate case proceedings.”
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