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Edison International (EIX) Set to Hike Dividend by 5.7%

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Edison International (EIX - Free Report) recently announced that its board of directors approved an increase of 15 cents per share in its annual dividend. With this increase, Edison International will now shell out a dividend of $2.80 per share, reflecting a rise of 5.7% from the prior dividend rate. This marks EIX’s 18th consecutive annual hike in dividends, reflecting its consistent commitment to reward its shareholders with payouts.

The $2.80 per share of dividend represents an annual dividend yield of 4.2% as of Dec 9, 2021. This further compares favorably with the industry’s yield of 3.45% and the Zacks S&P 500 composite’s average yield of 1.21%.  

Can Edison International Sustain Hike in Dividend Rates?

Edison International’s continuous commitment to reward its shareholders is backed by its financial strength to support increased dividends. EIX’s financial strength can be gauged from its cash and cash equivalent balance, which came in at $524 million at the end of the third quarter, reflecting a significant increase from $87 million as of Dec 31, 2020.

Looking ahead, the company expects to witness a long-term EPS CAGR of 5-7% through 2025. Moreover, it plans a capacity addition of approximately 535 MW (Megawatt) in utility-owned storage by Aug 2022, which should further augment its earnings and increase its distributable cash flows.

Additionally, Edison International’s increased focus on the Electric Vehicle segment through Charge Ready 2 program bodes well. EIX expects to build charging infrastructure to power 8,500 electric medium and heavy-duty vehicles. This, in turn, should bolster its earnings going forward. Backed by a strong cash position and investments to boost earnings, Edison International may continue rewarding its shareholders through increased dividends in the long haul.

Other Utilities to Boost Shareholders’ Worth

Companies reward its shareholders via dividends and share buybacks to reflect their disciplined capital-allocation strategy and the ability to generate distributable cash flow. In this context, Utilities other than Edison International indulged in driving shareholders’ total return through of increased dividends.

For instance, in December 2021, The AES Corporation’s (AES - Free Report) board members approved a hike in its first-quarter 2022 common stock dividend, expanding the total to 15.80 cents. The raised dividend is 5% above the prior payout.

The long-term EPS growth rate for AES Corporation stands at 8.32%. The stock has appreciated 16.1% in the past year.

Duke Energy’s (DUK - Free Report) dividend payment history indicates that it has been performing steadily and generating enough cash flow for a while to distribute dividends to its shareholders. In July, DUK’s board approved a 2.1% raise in its quarterly cash dividend, adding up to 98.5 cents per share.

Duke Energy’s long-term EPS growth rate is pegged at 5.29%. Moreover, the stock has gained 9.3% in the past year.

Earlier this month, the board of directors of WEC Energy (WEC - Free Report) announced plans to raise the first-quarter 2022 dividend to 72.75 cents per share, marking a hike of 7.4% and totaling the annual figure to $2.91 from $2.71. This is in line with its targeted payout ratio of 65-70% of earnings. If approved, the new dividend yield will be 3.27%.

The long-term EPS growth rate for WEC Energy stands at 6.3%. The stock has returned 0.9% in a year.

Price Performance

In the past year, shares of Edison International have gained 5.9% compared with the industry’s growth of 6.7%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank

Edison International currently carries a Zacks #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.