Why Consolidated Edison Is Poised to Outperform in 2025 and Beyond

In a macroeconomic landscape defined by sluggish growth and inflationary pressures, utility stocks have emerged as a rare haven for investors seeking stability and predictable returns. Among these, Consolidated Edison (ED) stands out as a compelling case study in how a regulated utility model can thrive—even in challenging environments. With a forward-looking strategy that balances regulatory alignment, robust earnings growth, and dividend sustainability, Con Edison is positioned to outperform in 2025 and beyond.

The Power of a Regulated Utility Model

Con Edison's core strength lies in its regulated utility framework, which allows it to recover inflation-linked costs through approved rate increases. The recent 3.2% base rate hike for New York City customers, approved in April 2025, exemplifies this model in action. This increase is not an anomaly but part of a broader strategy to align revenues with rising operational costs, including labor, materials, and grid modernization.

The company's capital plan of $47 billion through 2029 further underscores its long-term vision. These investments are not speculative but mandated by New York State's clean energy goals and the urgent need for grid resilience. Regulatory tailwinds are strong: pending 2026–2027 rate cases propose 17.9% and 14.9% hikes for electric and gas base rates, respectively. While regulatory delays and public opposition pose risks, the scale of these proposals highlights the company's ability to secure future cash flows in a low-growth economy.

Earnings Growth and Valuation Discount

Con Edison's financial performance in 2025 has been nothing short of impressive. Q1 2025 revenue surged 12.1% year-over-year to $4.8 billion, driven by rate increases and infrastructure investments. Earnings per share (EPS) exceeded expectations, with the consensus estimate for Q2 2025 at $0.85. If this trend continues, the company's forward P/E ratio of 19.5—below the multi-utility sector median of 21.5—suggests the stock is undervalued relative to its growth trajectory.

The Q2 earnings report on August 7, 2025, will be a pivotal moment. A strong result could catalyze a sector-wide revaluation, particularly if regulators approve pending rate cases. Even in a worst-case scenario where delays occur, Con Edison's diversified capital plan and geographic concentration in high-demand New York City markets provide a buffer against margin compression.

Dividend Sustainability: A Magnet for Income Investors

For income-focused investors, Con Edison's 3.8% dividend yield and 65% payout ratio offer a compelling value proposition. While the yield is slightly below the sector average of ~4.2%, the company's payout ratio ensures that dividends remain secure even under modest earnings growth. The recent quarterly dividend of 85 cents per share, declared on July 17, 2025, reinforces this commitment.

The company's dividend history is equally reassuring. Con Edison has consistently raised payouts for over a decade, and its $47 billion capital plan is designed to fund both infrastructure and shareholder returns. With New York State's climate mandates driving long-term demand for grid upgrades, the company's ability to sustain and grow dividends appears well-supported.

Risks and Regulatory Realities

No investment is without risks. Con Edison's rate cases face public scrutiny, particularly from Westchester municipalities challenging the proposed 2026–2028 increases. Critics argue that the allocation of 96% of infrastructure investments to New York City, despite equal cost-sharing with Westchester, is inequitable. While the New York Public Service Commission (PSC) has scheduled hearings to address these concerns, delays could temporarily weigh on earnings.

However, the broader regulatory environment remains favorable. Grid modernization and clean energy initiatives are public priorities, and Con Edison's alignment with these goals reduces the likelihood of prolonged regulatory setbacks.

Why Con Edison Is a Buy-and-Hold Candidate

For investors seeking reliable returns in a low-growth economy, Con Edison offers a rare combination of regulated stability, earnings resilience, and dividend security. Its valuation discount, coupled with a forward P/E expansion potential, makes it an attractive buy for both growth and income strategies.

Key catalysts to watch:
1. Q2 2025 Earnings: A beat could validate the company's growth narrative and narrow its valuation gap with peers.
2. Regulatory Approvals: Finalization of 2026–2028 rate cases will determine the scale of future earnings growth.
3. Dividend Increases: A September 2025 payout reaffirms the company's commitment to shareholder returns.

In conclusion, Con Edison's regulated utility model, strategic rate plans, and clean energy alignment position it to outperform in 2025 and beyond. For investors prioritizing capital preservation and steady income, this stock represents a compelling long-term hold.