Edison International (EIX - Analyst Report) has increased its quarterly dividend by 1.56% bringing the annualized dividend to $1.30 per share, from the previous payout of $1.28 per share. This is the eighth consecutive dividend increase by the company.
The quarterly dividend, incorporating the hike, will come to 32.5 cents per share, up from the prior payment of 32 cents per share. This increased quarterly dividend will be payable on January 31, 2012, to shareholders of record as on December 30, 2011.
The company plans to have a dividend payout in the range of 45%-55% of Southern California Edison’s net income with constant annual dividend hikes as approved by its Board of Directors. A year ago, on December 9, 2010, the company had increased its quarterly dividend by 1.6% to 32 cents per share from 31.5 cents per share.
The steady but modest dividend increases made by the company reflect its focus on balancing dividend growth with the expected large capital investments that are required to meet public policy mandates and system reliability. During the nine months ended September 2011, capital expenditures were $3.5 million compared with $3.1 million in the comparable period last year.
In November this year, Edison International reported third quarter 2011 results. In the reported quarter, the company clocked pro forma earnings of $1.31 per share, above the Zacks Consensus Estimate of $1.27 per share. The company generated cash and cash equivalents of $1.4 million in the quarter versus $2 million at the end of the prior-year period.
With its strong portfolio of regulated utility assets and well-managed merchant energy operations, Edison International presents a lower risk profile compared to its utility-only peers. Key growth drivers for the company include consistent performance of its stable utility operations, California's supportive regulatory environment, ongoing alternative energy projects, and steep growth in the rate base.
However, several factors continue to weigh on Edison International, including a tepid economy, volatile gas prices, and imminent expiry of its cheap rail transport contract and the recovery of capital expansion costs. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Rosemead, California, Edison International, through its subsidiaries, is a generator and distributor of electric power and an investor in infrastructure and energy assets, including renewable energy. Edison International is the parent company of Southern California Edison and Edison Mission Group. Some of its main competitors are The AES Corporation (AES - Analyst Report) and Sempra Energy (SRE - Analyst Report).