Edison International Declares 13% Hike In Quarterly Dividend

 | Dec 08, 2016 09:52PM ET

The board of directors of Edison International (NYSE:EIX) has approved a 13% increase in its quarterly dividend rate. The revised dividend of 54.25 cents per share will be distributed on Jan 31, 2017 to shareholders of record at the close of business on Dec 30, 2016.

The latest hike marks an increase of 6.25 cents from the prior payout of 48 cents per share. The new annualized dividend amounts to $2.17 per share, up from $1.92 paid earlier, resulting in a dividend yield of 3.13%.

Notably, this is the 13th consecutive year of a dividend hike by Edison’s management.

Solid Asset Portfolio & Operating Profile

With a strong portfolio of regulated utility assets and well-managed merchant energy operations, Edison presents a lower risk profile than its utility-only peers. In addition, the company boasts a solid financial position backed by a strong cash generation capacity. As of Sep 30, 2016, Edison International had cash and cash equivalents of $84 million. In addition, the company continues to show efficiency in terms of reporting a stable cash inflow through operating activities. The company’s cash flow from operating activities in the first nine months of 2016 was $2,500 million.

A stable financial position enables Edison International to maximize shareholder value through the payment of regular dividends and repurchase of shares. Moreover, the company is on track to achieve the targeted payout ratio of 45–55% of its subsidiary Southern California Edison’s earnings. These initiatives will allow the company to retain investor interest in the stock.

Price Movement

Edison has outperformed the Zacks categorized Utility-Electric Power industry over the last 12 months. Share price of Edison surged 17.9% during this time frame, compared with the industry’s gain of 7.8%.

Dividend growth prospects, a constructive regulatory environment, and no equity requirements are fuelling investor interest in the stock and in turn, its price.