Dividend Stock Showdown: Consolidated Edison vs. Duke Energy – Best Utility Stock

Video Length: 00:13:10

We bring another Dividend Stock Showdown to you! After all, we are always on the hunt for a great undervalued dividend growth stock to add to your dividend stock portfolio. We compare two giants in the utility stock sector against each other to determine which company is a better fit for your portfolio TODAY. The two companies in our analysis are: Consolidated Edison (ED) and Duke Energy (DUK).

Utility stocks can offer dividend investors a strong dividend yield with a reliable, growing dividend income stream. That is why we are turning our attention to two of the largest companies in the sector!

In one corner, you have Consolidated Edison (ED). The Dividend Aristocrat that has increased their dividend for 45 consecutive years.  Oh yeah, did we also mention that they are one of our Top 5 Foundation Dividend Stocks?  In the other corner, we have Duke Energy.  While the company has only increased their dividend for 8 consecutive years, they offer investors a higher dividend yield than their competitor!

We run both companies through the Dividend Diplomats Dividend Stock Screener to determine which company performs better head to head. This includes the 3 metrics of our famous stock screener (and one bonus metric). We compare the following metrics for the two companies:

1. Price to Earnings Ratio Less Than the S&P 500
2. Dividend Payout Ratio Less Than 60%
3. Dividend Growth History and Dividend Growth Rate
4. Dividend Yield (Bonus Metric)

The utility sector is an important part of our everyday life. In 2020, we require electricity for nearly everything. Electricity charged the laptop or phone you are using to watch this video, in fact! In all seriousness, our homes, streets, businesses and even some vehicles (thank you Tesla) depend on the reliable delivery of their products. This helps build a consistent, growing revenue and earnings stream for utility companies, which translates to a growing dividend income stream as well.

Consolidated Edison was founded in the 1800s by their namesake Thomas Edison. That’s right, the founder of electricity! Consolidated Edison has grown and expanded their services to offer electricity and natural gas to their consumer base on the east coast. Duke Energy serves a strong consumer base in the Carolinas, Midwest, and Florida.

Both companies operate in the same sector and offer strong dividend yields above 4%. Therefore, it only makes sense to compare the two dividend stocks against each other to determine if the company earns a spot in your dividend stock watch list and maybe, your dividend stock portfolio.

We run both stocks through the Dividend Diplomat Stock Screener and see if they are worth a spot in your dividend stock watch list and/or stock portfolio. We review the price to earnings ratio, payout ratio, dividend growth history & rate, as well as dividend yield, the bonus stock metric.

1.) Price to Earnings Ratio (P/E Ratio) - The price to earnings ratio assesses a company’s valuation. We can compare this to the stock market, on average, and against the competition. The S&P 500 is currently trading at a P/E Ratio of 28X. Both Consolidated Edison, 16.4X, and Duke Energy, 15.7X, are showing signs of undervaluation compared to the market. Both are similar; however, Duke’s P/E Ratio is slightly lower!

2.) Dividend Payout Ratio - This metric measures the safety of the dividend. Typically, we look for a dividend payout ratio less than 60%. Consolidated Edison, 67.8%, and Duke Energy, 74%, both have dividend payout ratios higher than our threshold. However, based on the nature of the utility sector, we are not running for the doors.

3.) Dividend History and Dividend Growth Rate - Consolidated Edison has increased their dividend for 45 consecutive years. They are a Dividend Aristocrat, and almost a Dividend King. Duke Energy, on the other hand, has only increased their dividend for 8 consecutive years. Both companies have similar dividend growth rates, with 5-year average dividend growth rates just over 3%.

4.) BONUS METRIC: Dividend Yield - The bonus metric of our dividend stock screener. Both companies have a dividend yield over 4%. Consolidated Edison’s dividend yield is 4.14% and Duke Energy’s dividend yield is 4.73%. Strong dividend yields for sure! Much higher than the rate of inclination and the APY on your savings account.

In the end, it’s obviously dependent upon your personal situation, dividend portfolio, and if they fit with your basket of companies you own. However, we both answer one important answer at the end of the video. If you had to invest $100 in one of the two companies, which company would you pick?