As tech hot fads and long shots continue to come and go in today's market, conservative investors have seen reliable utility stocks like Consolidated Edison (NYSE: ED) delivering tried-and-true dividends. Let's take a look at why Con Ed might just be the safest bet for this uncertain economy.
Solid and steady wins the race...
Con Ed provides power, gas, and steam services to New York City and its surrounding areas -- a gargantuan consumer base always in need of power. The company has parlayed this advantage into a dividend-generating machine: Con Ed has increased dividends for 37 straight years without fail and has soundly beaten the S&P 500 for more than 30 years.
That's commitment you can rely on, even if it's from an inglorious sector such as the utilities industry. Con Ed's position in the Big Apple gives it access to a growing population, a critical point necessary for utility corporations to grow. New York City's population swelled by almost 70,000 between March 2010 and July 2011, representing the U.S.'s fourth-largest metropolitan population boost in that time.
Compared to the 2000-2010 gain of only 175,000 residents, that's a significant jump -- bolstered by the flight of young people to New York City. Given that the recession has pushed urban growth higher than in the suburbs, Con Ed should continue to see its expanding consumer base blossom in future years.
...but it isn't all investor glee
Unfortunately for Con Ed, the stock looks only average when matched up with other major national utility providers.
|
Company |
P/E |
Dividend Yield |
Dividend Payout |
5-Year Dividend Growth Rate |
|---|---|---|---|---|
| Consolidated Edison | 17.1 | 3.8% | 67% | 0.8% |
| American Electric Power (NYSE: AEP) | 10.5 | 4.3% | 46% | 3.5% |
| Dominion (NYSE: D) | 23.1 | 3.9% | 87% | 7.1% |
| Exelon (NYSE: EXC) | 16.2 | 5.5% | 87% | 3.9% |
Sources: Yahoo! Finance and Motley Fool CAPS.
It's not all ho-hum for Con Ed; the company boasts an industry-beating long-term debt-to-equity ratio of 0.85 and a healthy, growing net margin. Still, for those simply looking for larger income, Exelon's 5.5% and Southern Company's (NYSE: SO) 4.2% yields look mighty attractive, with five-year growth rates exceeding 3% for each.
For security and peace of mind, however, investors wary of market volatility couldn't do much better than Con Ed. Those looking for steady safety in the storm could anchor their portfolio on this consistent producer. The power of secure dividends can safeguard portfolios in the worst of market climates. To check out three more rock-solid income picks, see your copy of The Motley Fool's free report, "The 3 Dow Stocks Dividend Investors Need."
