April 27, 2025 a 02:46 am
EIX: Dividend Analysis - Edison International
📊 Edison International offers a substantial dividend yield, reflecting its strong commitment to returning capital to shareholders. However, the negative growth in dividends over recent years poses a risk to future income stability. Monitoring the payout ratios and cash flow dynamics will be crucial in evaluating the sustainability of its current yield. The company's extensive dividend history indicates a potential resilience, although recent trends call for cautious optimism.
Overview
🗣️ Edison International operates within the Utilities sector, providing essential services that typically ensure steady cash flows and dividend distributions. Despite a current dividend yield of approximately 6%, investors should be mindful of the recent 5-year dividend growth rate of -1.12%, suggesting a contraction in dividend progression. The company's 50-year dividend history illustrates a long-standing tradition of returning profits to shareholders, though it's essential to consider more recent performance.
| Metric | Value |
|---|---|
| Sector | Utilities |
| Dividend yield | 5.99 % |
| Current dividend per share | 3.33 USD |
| Dividend history | 50 years |
| Last cut or suspension | None |
Dividend History
📈 Historical dividend payments reflect a stable income stream for investors. An established dividend history provides confidence but must be evaluated in conjunction with overall financial health. The following table details the last five years of payments, exemplifying the company's payout commitment.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.6550 |
| 2024 | 2.34 |
| 2023 | 2.9925 |
| 2022 | 2.8375 |
| 2021 | 2.6875 |
Dividend Growth
📉 While the dividend yield remains attractive, the negative growth percentages over the past three (-4.51%) and five years (-1.11%) highlight potential challenges in maintaining future dividend increases. The following table outlines growth over three and five years, underscoring the need for consistent business performance to sustain shareholder returns.
| Time | Growth |
|---|---|
| 3 years | -4.51 % |
| 5 years | -1.11 % |
The average dividend growth is -1.11% over 5 years. This shows moderate but steady dividend growth challenges.
Payout Ratio
⚠️ Understanding payout ratios helps assess a company's ability to sustain dividends. Edison International's EPS-based payout ratio of 86.02% suggests a high reliance on earnings to fund dividends, while the negative FCF-based ratio indicates potential cash flow struggles, important factors when considering dividend viability.
| Key figure | Ratio |
|---|---|
| EPS-based | 86.02 % |
| Free cash flow-based | -185.10 % |
With an EPS payout of 86.02% and a concerning FCF payout, dividend sustainability might be compromised if economic conditions tighten.
Cashflow & Capital Efficiency
💰 Assessing cash flow and capital efficiency is vital for evaluating a company's ability to reinvest and sustain its dividend policy. The negative free cash flow yield and the high CAPEX to operating cash flow ratio could point to difficulties in cash flow sustainability and capital deployment.
| Year | Free Cash Flow Yield | Earnings Yield | CAPEX to Operating Cash Flow | Stock-based Compensation to Revenue | FCF / Operating Cash Flow Ratio | ROIC |
|---|---|---|---|---|---|---|
| 2024 | -2.25 % | 5.02 % | 113.82 % | 0 % | -13.82 % | 20.41 % |
| 2023 | -7.48 % | 5.14 % | 160.19 % | 0 % | -60.19 % | 3.17 % |
| 2022 | -10.57 % | 3.40 % | 179.66 % | 0.24 % | -79.66 % | 2.53 % |
The negative cash flow yield and high CAPEX levels highlight potential financial strain, which could impact long-term dividend continuity.
Balance Sheet & Leverage Analysis
📊 The balance sheet strength is crucial for understanding a company's risk exposure. Edison International's leverage ratios indicate high debt levels, which could affect its ability to maneuver financially if economic conditions worsen.
| Year | Debt-to-Equity | Debt-to-Assets | Debt-to-Capital | Net Debt to EBITDA | Current Ratio | Quick Ratio | Financial Leverage |
|---|---|---|---|---|---|---|---|
| 2024 | 30.28 % | 21.36 % | 23.24 % | 0.74 | 0.07 | 0.07 | 1.42 |
| 2023 | 227.80 % | 43.19 % | 69.49 % | 5.98 | 0.79 | 0.73 | 5.27 |
| 2022 | 211.87 % | 42.41 % | 67.93 % | 7.21 | 0.68 | 0.64 | 5.00 |
High leverage and significant debt exposure may pose risks to financial stability in challenging markets, impacting long-term dividend strategies.
Fundamental Strength & Profitability
📈 Analyzing profitability metrics offers insight into a firm's ability to generate returns. Edison International shows moderate profitability, and its net margins demonstrate a consistent revenue-to-profit conversion, essential for sustaining dividends.
| Year | Return on Equity | Return on Assets | Net Margin | EBIT Margin | EBITDA Margin | Gross Margin | R&D to Revenue |
|---|---|---|---|---|---|---|---|
| 2024 | 9.93 % | 7.01 % | 8.78 % | 19.50 % | 36.20 % | 100 % | 0 % |
| 2023 | 9.08 % | 1.72 % | 8.61 % | 19.14 % | 35.79 % | 41.09 % | 0 % |
| 2022 | 5.27 % | 1.06 % | 4.79 % | 10.63 % | 25.92 % | 35.55 % | 1.998 % |
Despite moderate returns, Edison International's profitability metrics signal a stable operational efficiency, crucial for maintaining dividend payouts.
Price Development
Dividend Scoring System
✅ Utilizing our bespoke dividend scoring system, Edison International is evaluated across multiple dimensions to provide a comprehensive rating:
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 4 | |
| Dividend stability | 3 | |
| Dividend growth | 2 | |
| Payout ratio | 2 | |
| Financial stability | 3 | |
| Dividend continuity | 4 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 2 |
Overall Score: 22/40
Rating
⚠️ Edison International demonstrates a solid commitment to its dividend policy; however, investors should remain cautious due to its recent dividend contraction and significant payout from earnings. It’s crucial to monitor financial metrics closely to ensure continued dividend satisfaction. Potential investors should weigh the attractive dividend yield against the underlying risks in leverage and cash flow constraints.