Consolidated Edison (NYSE:ED) pays its investors well. The utility's current dividend yields 3.4%, well above the roughly 2% average of stocks in the S&P 500.

However, having an above-average yield alone doesn't automatically make it a great dividend payer. For that, we need to look a bit deeper, considering the sustainability of the payout and its growth potential.

With that in mind, here's a closer look at past, present, and future of Con Edison's dividend.

A person holding out their hand with the word dividends written above it.

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45 years and counting

Con Edison has a long history of not only paying a dividend to its investors but also increasing it each year. The company's growth streak currently stretches for the past 45 consecutive years. That puts it in an elite group of dividend payers, as it more than qualifies for the designation of being a Dividend Aristocrat, which are companies that have increased their payout for at least 25 straight years. Meanwhile, it's closing in on an even more elite group: Dividend Kings. These companies have raised their dividends for more than 50 consecutive years.

While many of Con Edison's dividend increases have been minor ones, the company has accelerated its growth rate over the past five years. Overall, it has grown its payout at a 3.3% compound annual rate during that period, compared with a 1.3% compound annual rate in the prior five-year period.

Dividend growth, even at a slow pace, matters more than most investors probably realize. Companies that increase their payouts regularly typically outperform not only the S&P 500 but also those that don't grow their dividends. That has certainly been the case for Con Edison over the past two decades, as it has generated a roughly 525% total return, which is more than double the 225% total return of the S&P 500 during that timeframe.

Rock-solid right now

Con Edison's excellent dividend history is certainly notable, but it doesn't guarantee that the company will continue to be a great income stock in the future. Two factors, however, can provide investors with a glimpse of a company's ability to increase its payout. The first one is whether it has a strong enough financial profile to sustain its current payout rate.

In Con Edison's case, it's on track to pay out about 69% of its adjusted earnings this year. That's within its target range of 60% to 70% and right around the average within the utility sector. In addition to that, the company has a solid investment-grade credit rating with a stable outlook from the major rating agencies. Those metrics suggest that the payout is on a sustainable footing.

Healthy growth prospects

The other key aspect of determining a company's ability to increase its dividend is the visibility of its growth prospects. Con Edison currently expects to invest more than $12 billion over the next three years to expand its energy infrastructure. Most of that money will go toward enhancing its regulated utilities, which means it should generate a good return on that investment. That suggests the company should be able to continue growing its adjusted earnings over the next few years. Add that to its sound financial profile, and Con Edison appears likely to continue increasing its dividend.

Verdict: Con Edison is a great dividend stock

Con Edison has everything income investors should look for in a dividend-paying stock. It offers a well-supported, above-average-yielding payout that it has consistently increased over the years, which should continue in those to come. It's an excellent stock for dividend-focused investors to consider.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.