) has increased its quarterly dividend by 3.85%, bringing the
annualized dividend to $1.35 per share from the previous payout
of $1.30 per share.
The quarterly dividend, after the hike, will come to 33.75 cents
per share, up from the prior payment of 32.50 cents per share.
The first increased dividend will be paid on January 31, 2013 to
shareholders of record on December 31, 2012.
This marks the ninth consecutive annual increase of Edison's
common stock dividend. Last year in December 2011, the company
had increased the annual dividend by 1.56% to $1.30 from $1.28.
The company targets a dividend payout ratio of 45% to 55% of the
earnings of Southern California Edison. This increase of 3.85%
would prove to be the first step in achieving this target.
Further, this target payout ratio can be achieved with the
company's attempts of moderating its capital expenditure levels
at Southern California Edison.
The continuous increase in dividend reflects the company's focus
on balancing dividend growth and increase in shareholder's value.
Moreover, the company seems to be making the best use of its
liquidity position with a cash balance of $1.08 billion.
In September this year, the company announced that as a part of
Edison SmartConnect program, it plans to install smart electric
meters in the San Joaquin Valley. Edison SmartConnect is a $1.6
billion program authorized by the California Public Utilities
Commission. Edison SmartConnect meters are digital, safe and
mutual communicating devices. The company will replace the
traditional mechanical meters, which would result in the
transition of electric system into a smart grid.
The company expects its sustained energy conservation to reduce
greenhouse gas emissions and smog forming pollutants by an
estimated 365,000 metric tons per year, which is equivalent of
removing 79,000 cars from the road. These meters will allow the
residential and small business customers to benefit from new
energy and cost-saving programs and services in the near term.
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.
Going forward, key growth drivers for the company are consistent
performance of its stable utility operations, California's
supportive regulatory environment, steep growth in the rate base,
incremental dividend, and ongoing alternative energy projects,
which is in line with the renewable energy mandate.
However, we remain concerned due to the tepid economy, volatile
gas prices and the pending regulatory approval for 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.
Another power provider company
Dominion Resources Inc.
) also recently hiked its dividend rate to $2.25 per share for
2013, reflecting a 6.6% increase from $2.11 per share in 2012.
California-based Edison International is a utility holding
company operating through its principal subsidiaries: Southern
California Edison Company, Edison Mission Energy, and Edison
DOMINION RES VA (D): Free Stock Analysis
EDISON INTL (EIX): Free Stock Analysis Report
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