Con Ed: Investing in tradition, profiting from dividends.

Last Updated: 15. Januar 2024By

If you consider stocks of companies that pay dividends in your investment strategy, it can be beneficial for you for various reasons, because: dividends provide a stable source of income as well as long-term returns. By reinvesting the dividend, you can even achieve a compound interest effect.

In addition, companies that pay dividends signal that they are financially stable and profitable. The payout of dividends shows that a company has sufficient cash flow. The management usually handles finances well.

Would you like to get to know a company that has been paying dividends regularly for 49 years? Then we would like to introduce you to Consolidated Edison or Con Ed (WKN: 911563). The company, founded by Thomas Edison, is one of the oldest still existing companies on the New York Stock Exchange.

Consolidated Edison Inc., Source: Stock Screener Investor Verlag Founded by the famous inventor Thomas Edison This company of the inventor of the light bulb is naturally involved in electricity. Con Ed is the energy provider for New York City and a few surrounding districts. It may not sound very exciting, but investing in the company has been quite attractive in recent decades due to its dividend payments.

As the electricity supplier for New York, Con Ed has always had reliable income. An advantage is that the energy market in New York is heavily regulated. Con Ed therefore has a monopoly on energy supply.

A good alternative to US government bonds Due to the dividend, Con Ed stocks have been more attractive for many investors over longer periods of time than investments in US government bonds. Those seeking security and a good return therefore gladly added Con Ed stocks to their portfolio.

The supplier is listed in the S&P 500 Utilities, which took a big hit last year due to interest rate hikes by the Fed. The index lost around 10%, while the „normal“ S&P 500 gained 24%. As a general rule: when interest rates rise, dividends become less attractive. Therefore, many investors tend to remove stocks from utilities from their portfolios.

Monopoly was a big advantage last year However, it is interesting to note that Con Ed fared better than some of its competitors due to its monopoly position. The decline was only -4%. As mentioned before, the regulation of the New York electricity market is a special case. The S&P 500 Utilities also includes numerous companies listed in an unregulated market. These companies are more likely to be stuck with higher costs, as they cannot simply pass them on to their customers when competitors offer cheaper deals.

Rising stock price in sight plus dividends The market value of Con Ed is $32 billion. That corresponds to around 19 times the expected earnings. For a company with reliable profits, that’s not too expensive.

In addition, the dividend could soon become more important again, as it is expected that interest rates will soon decline. If more investors buy the Con Ed stock again, the demand will automatically increase, which could drive up the price of the stock.

The stock is definitely worth a look – you can then decide for yourself whether it could be a valuable addition to your portfolio.

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