3/8/25
Edison International (NYSE: EIX) is a major utility company, best known for its Southern California Edison (SCE) subsidiary, which provides power to millions of customers. As a regulated utility, it benefits from consistent revenue streams, making it an attractive option for income-focused investors.
That said, dividend investing isn’t just about yield—it’s about sustainability. EIX offers a high payout, but its debt levels and earnings trends deserve a closer look. Here’s what dividend investors should know before making a decision.
Key Dividend Metrics
📌 Dividend Yield: 6.01% – higher than its five-year average
📌 Annual Dividend Per Share: $3.31 – a reliable payout
📌 Payout Ratio: 95.69% – raises sustainability concerns
📌 5-Year Dividend Growth Rate: ~3% per year – modest increases
📌 Dividend Streak: 20+ years – consistency, but slow growth
📌 Next Ex-Dividend Date: April 7, 2025
📌 Dividend Payment Date: April 30, 2025
Dividend Overview
Edison International’s 6% dividend yield is well above its historical average and significantly higher than the utility sector as a whole. That kind of income can be appealing, especially for those seeking steady cash flow.
The issue? The company’s payout ratio is nearly 96%, meaning almost all of its earnings go toward dividends. While utilities can afford high payout ratios due to their stable business models, this level leaves little wiggle room. If earnings take a hit or expenses rise unexpectedly, EIX might struggle to maintain these payments.
For now, the dividend looks stable, but it’s not as bulletproof as some of its lower-payout peers.
Dividend Growth and Safety
Edison International has a solid track record of paying dividends, but its growth is another story. Over the past five years, the company has only increased its payout by about 3% annually, which barely keeps pace with inflation.
That’s fine for investors who just want steady income, but it’s not ideal for those looking for long-term compounding dividend growth.
Key factors affecting dividend safety:
- Revenue Stability: As a regulated utility, EIX enjoys steady cash flow, which helps keep dividends flowing.
- High Payout Ratio: A near-96% payout means there’s little room for error. A drop in earnings could force a dividend cut.
- Debt Load: The company carries a very high debt-to-equity ratio of 213%, meaning a large chunk of earnings goes toward debt obligations.
For now, the dividend appears safe, but there’s no guarantee it will keep growing at even its current modest pace.
Chart Analysis
Price Action and Trend
Edison International (EIX) has been in a clear downtrend, with a steep decline starting in late 2024. The stock fell from highs near $90 to a recent low around $50. While it has shown some recovery, climbing back above $56, the overall trend still leans bearish.
The 50-day moving average (light blue line) is sharply declining and remains well below the 200-day moving average (dark blue line), signaling that the stock is still in a longer-term downtrend. This suggests that any short-term rebound could still face resistance as EIX attempts to establish a stronger base.
Moving Averages
The death cross, where the 50-day moving average drops below the 200-day moving average, is visible on the chart. This is a well-known bearish signal and often suggests that the stock could struggle to regain momentum in the near term.
Currently, the price is trading below both moving averages, meaning there is a long road ahead before reclaiming stronger levels of technical support. The 200-day moving average, sitting above $75, is particularly far from the current price, reinforcing that the stock remains in a lower trading range.
Volume Activity
Volume has been elevated during the sharp decline, indicating that the selling pressure was strong during the drop. However, the recent bounce from the $50 level has come with increasing volume, which is a positive sign. If this uptick in volume continues, it could suggest that buyers are stepping in to support the stock at these lower levels.
That being said, previous high-volume selloffs indicate that there was significant institutional distribution, and any sustained recovery will likely need more accumulation from long-term investors.
Relative Strength Index (RSI)
The RSI had been deep in oversold territory below 30 during the steep decline, but it has now recovered to more neutral levels. This shift suggests that the selling momentum is cooling off, and the stock is no longer in extreme oversold conditions.
However, with the RSI still below overbought territory, there is some room for further upside if buying pressure continues. At the same time, given the overall downtrend, it’s important to watch for potential resistance levels where the stock may struggle to gain further traction.
Analyst Ratings
Edison International (EIX) has recently received both upgrades and downgrades from analysts, reflecting a mix of optimism and caution regarding the stock’s future.
Upgrades:
📈 In mid-January 2025, analysts at Ladenburg Thalmann upgraded EIX from a sell to a neutral rating. This change was based on their assessment that the stock’s valuation had already accounted for potential worst-case scenarios related to ongoing California wildfires. Despite the upgrade, they adjusted their price target downward to 56.50 from 61, reflecting a cautious outlook amidst environmental challenges.
Downgrades:
📉 In late February 2025, Wells Fargo reduced its price target for EIX from 94 to 75, maintaining an overweight rating. This adjustment was influenced by concerns over the company’s exposure to wildfire liabilities and the potential financial impact.
📉 Similarly, in early March 2025, Mizuho lowered its price target from 75 to 66 while maintaining an outperform rating, citing regulatory uncertainties and operational challenges.
📉 Additionally, Guggenheim downgraded EIX from a buy to a neutral rating in late January 2025, reflecting a more cautious stance due to potential risks associated with the company’s operations.
Consensus Price Target:
📊 As of early March 2025, the consensus among analysts suggests a 12-month average price target for EIX of approximately 76.54, indicating a potential upside from its current trading levels. This consensus reflects a range of perspectives, with some analysts expressing optimism about the company’s resilience and others highlighting caution due to external risks.
These mixed assessments underscore the complexities facing Edison International, balancing its role as a utility provider with the challenges posed by environmental and regulatory factors. Investors are weighing these factors carefully when evaluating the stock’s potential.
Earning Report Summary
Edison International (EIX) just dropped its latest earnings report, and it was a mixed bag of good and bad news. While the company managed to post solid full-year results, the most recent quarter showed a bit of a slowdown.
Fourth Quarter Performance
In the final stretch of 2024, Edison International reported a net income of $340 million, which works out to about $0.88 per share. That’s down from the $378 million, or $0.99 per share, it pulled in during the same quarter the year before. Core earnings also took a dip, coming in at $405 million ($1.05 per share) compared to $490 million ($1.28 per share) in the previous year’s fourth quarter.
So, what caused the drop? A few things played into it. First, the company’s operating and maintenance costs went up, which cut into profits. Interest expenses also climbed, thanks to higher rates and overall financial conditions. On the revenue side, they did see a boost from regulatory adjustments, but it wasn’t enough to fully offset the higher expenses.
Full-Year Highlights
For the whole of 2024, things looked a little better. Edison International posted net income of $1.28 billion, or $3.33 per share, which was actually an improvement from 2023, when it made $1.20 billion ($3.12 per share). Core earnings also ticked up slightly to $1.90 billion ($4.93 per share), compared to $1.83 billion ($4.76 per share) the year before.
The company saw revenue growth, largely thanks to regulatory changes that allowed for higher authorized rates. A slight boost from rate adjustments also helped, but, again, interest expenses remained a challenge.
Wildfire Liabilities and Settlements
One of the big headlines in this report was the approval of a major settlement related to past wildfires. Regulators approved a $1.6 billion recovery plan tied to older wildfire-related costs, which should help stabilize Edison International’s financial outlook. The company continues to invest heavily in wildfire mitigation, hoping to prevent future liabilities and keep its grid more resilient.
Looking Ahead
Edison International is setting expectations for 2025, with projected core earnings per share ranging from $5.94 to $6.34. They’re also sticking with a long-term growth target of 5% to 7% per year, with expectations to hit between $6.74 and $7.14 per share by 2028.
That forecast relies on continued infrastructure investments, regulatory support in California, and tighter control over operating costs. While challenges like interest rates and environmental risks remain, the company is betting on steady earnings growth over the next few years.
Financial Health and Stability
One of the biggest red flags for Edison International is its high debt burden. The company currently has $37.76 billion in total debt, which is over 200% of its equity. That’s well above what many investors would consider ideal.
- Revenue Growth: Up 7.5% year over year – a positive sign
- Profit Margin: 7.3% – reasonable but not outstanding
- Return on Equity (ROE): 7.2% – suggests the company is not highly efficient at generating returns
- Operating Cash Flow: $5 billion – strong, but free cash flow is negative due to capital expenditures
The company’s revenue growth is encouraging, but declining earnings (-10.1% year over year) could create problems down the road. Given its high debt, EIX needs to carefully manage its expenses to keep dividends secure.
Valuation and Stock Performance
At a current share price of $56.40, Edison International is trading far below its 52-week high of $88.77. That’s a 36% drop, largely driven by rising interest rates and regulatory concerns in California.
Some investors might see this as an opportunity to buy a quality utility stock at a discount. Here’s how its valuation looks:
- Forward Price-to-Earnings (P/E): 9.4x – looks cheap compared to the broader market
- Price-to-Book (P/B): 1.52x – in line with historical valuations
- Enterprise Value/EBITDA: 9.48x – reasonable for the sector
With a low forward P/E, the stock might be undervalued—if earnings remain steady. However, the current price drop reflects real concerns, particularly surrounding regulatory risks and high debt levels.
Risks and Considerations
Even with a high dividend yield, EIX carries notable risks that investors should weigh carefully.
1. Heavy Debt and Interest Rate Sensitivity
With over $37 billion in debt, Edison International is highly leveraged. If interest rates remain high or climb further, the cost of refinancing this debt could cut into profits and make dividends harder to sustain.
2. Regulatory and Legal Challenges
As a California-based utility, EIX faces unique risks, particularly related to wildfire liabilities. The company has already paid out billions in wildfire settlements, and future legal issues could further impact its financial health.
3. Slow Dividend Growth
The modest 3% dividend growth rate may not be enough for investors who want long-term income growth. With a high payout ratio and capital-intensive business model, it’s unlikely that EIX will accelerate dividend hikes anytime soon.
4. Declining Earnings
Despite rising revenue, earnings fell 10% year over year. If this trend continues, it could eventually impact dividend sustainability, making future payouts less reliable.
Final Thoughts
Edison International is a high-yield, slow-growth dividend stock that provides reliable income, but not without risks. The 6% yield is attractive, and the stock’s current price might look like a bargain. However, with high debt, regulatory risks, and sluggish dividend growth, investors should carefully consider whether it fits their portfolio strategy.
For those who just want steady income without expecting major dividend increases, EIX could work. But for investors looking for long-term growth alongside their dividends, other options may offer a better balance of yield and financial stability.
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