Linked here is a PDF copy of my detailed analysis of Consolidated Edison, Inc. (ED) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Consolidated Edison, Inc., through its subsidiaries, provides electric, gas, and steam utility services in the United States.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1.) Avg. High Yield Price, 2.) 20-Year DCF Price, 3.) Avg. P/E Price and 4.) Graham Number. ED is trading at a discount to 3.) and 4.) above. If I exclude the high and low valuation, and average the remaining two valuations, ED is trading at a 9.9% discount. ED earns a Star for trading at a fair value.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description: 1.) Rolling 4-yr Div. > 15%, 2.) Dividend Growth Rate, 3.) Years of Div. Growth, 4.) 1-Yr. > 5-Yr Growth and 5.) Payout 15% of avg. ED earned a Star in 3.) above. It has increased its dividend for 10+ years.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description: 1.) NPV MMA Diff. and 2.) Years to >MMA. ED earned one Star in this section. Its current yield of 5.62% is in excess of the high-yield MMA rate of 4.61%.
Other: ED is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. It has increased its quarterly cash dividend payments for 34 consecutive years.
Conclusion: ED earned one Star in the Fair Value section, one Star in the Dividend Analytical Data section and one Star in the Dividend Income vs. MMA section for a total of three Stars, which rates it as a 3 Star-Hold.
Back in December I reviewed ED and was quite harsh toward it. My perspective has changed. Tomorrow I will discuss the reason for the change.
Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I own shares of ED (3.6% of my Income Portfolio).
What are your thoughts on ED?
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Stock Analysis: Consolidated Edison, Inc. (ED)
Posted by D4L | Monday, March 10, 2008 | analysis | 2 comments »________________________________________________________________
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Cramer was bullish on this stock last week on mad money.
But with the anemic dividend growth, your only alternative is to fully re-invest the dividend for a 6% change in income. I would be a fan of ED if I really needed the income now.
DG: The dividend growth (or lack thereof) is what was pushing me to divest. As noted it today's post, I need ED, and other similar utilities to balance some of my more riskier investments.
Best Wishes,
D4L