Consolidated Edison (NYSE:ED)

Consolidated Edison is theone of the largest energy companies in the United States, with annual sales of $14 billion and assets of $36 billion. Its main subsidiary, Consolidated Edison Company of New York, Inc., provides electricity, gas and steam to more than 3 million customers in New York City and Westchester County, New York, a 660-square-mile (1,709 km²) area with a population of nearly 9 million.

The first incarnation of Con Edison, the New York Gas Light Company, has been founded by a group of New York investors in 1823. The following year, the title of the New York Gas Light is traded on the New York Stock Exchange. Thus, Con Edison holds the record for the oldest company listed on the NYSE. Con Edison's electrical business also began in 1882, when Thomas Edison ofEdison Electric Illuminating Company of New York, begins delivering electricity to 59 customers, clustered in a one-square-mile area in Lower Manhattan. That's the world's first electrical distribution network!

Inasmuch as monopoly, Consolidated Edison Company of New York (CECONY) does not have to worry about competition, but must take into account population growth rates. Prices are set by government regulators. This means that the main drivers of growth for ConEd are changes in the populations of the regions it serves. Recently, however, the company's growth has come not from population growth, but from load growth. This means that roughly the same number of customers consumed more energy per capita.

Due to its mix of residential and commercial customers, CECONY is relatively protected against economic shocks (at least compared to utilities that serve more industrial customers). Yet ConEd is dependent on the health of New York's economy, and an economic downturn could seriously dent its revenues. 

This monopolistic and defensive nature of ED is reflected in its title. The action displays a volatility of only 10.52% and a tiny beta of 0.27. THE long term average dividend yield is particularly attractive, with 5.89%. On the other hand, the price/earnings ratio is not as glorious, with 15.80. Moreover, even if ED has increased its dividend for 36 consecutive years, the average annual growth in recent years has been only 0.84%. Le distribution ratio, with 65.78%, still leaves some room for ED to increase its dividend in the future, even in the event of stagnant profits, but we should expect similar increases to those of recent years.

The graph below shows the defensive nature of ED. The price growth is constant, but weak, as is that of its dividends.

ED offers a good yield, a low volatility price and little sensitivity to the economic situation. All things considered, one could almost consider it as a obligation, even in its flaws. Indeed, the anemic growth of the dividend makes it dependent on inflation.

ED is an ideal title for a rentier, with a high, stable yield, a low volatility price, and good fundamentals. But from our perspective, with a long-term investment perspective, the distribution growth is not high enough to justify a purchase.

Sources: wikipedia.org, wikinvest.com, yahoo.com, swissquote.ch, dividends.ch