Consolidated Edison, Inc. (ED) — This large-cap electric utility looks like a good buy for investors seeking an income play with upside potential in what appears to be a high-risk environment for growth stocks. While the broader market is down almost 8% year to date, ED stock has risen more than 6%.
Consolidated Edison is considered a Dividend Aristocrat. To qualify, a company must have raised its dividend every year for at least 25 years. Consolidated Edison has increased its payout for 42 consecutive years with the latest coming this week. On Tuesday, the company announced a 3% hike in its quarterly dividend to 67 cents per share. ED stock currently yields 3.9%, which is above the industry average yield of 2.9%.
Analysts at The Street rate shares a “Buy,” saying the company’s somewhat disappointing return on equity is outweighed by above-average revenue growth, attractive valuation and strong cash flow. They have a target price of just over $78 on ED stock.
The consensus estimate calls for earnings to increase 3% this year to $4.02 per share and another 1.5% next year to $4.08.
ED stock double-bottomed in December at about $60.50, maintaining a rectangle formation that started in July. Last week, shares broke from the top of the rectangle at about $68 on strong accumulation. Despite the high volatility in the broader market, ED stock has maintained its breakout point.
Additionally, in September, the 50-day moving average crossed up through the 200-day in a golden cross, which is a long-term bullish signal.
My target for ED stock is $75 in 12 months, which would result in capital gains of nearly 10% and a total return of about 14%.
