Edison International (EIX): A 6%-Yielding Utility Stock Built to Weather Any Storm

In an era of economic uncertainty and rising interest rates, investors crave dividend stocks that combine stability with compelling income. Edison International (EIX), the parent company of Southern California Edison, emerges as a standout candidate. With a 6.45% dividend yield, a 21-year streak of annual dividend increases, and a business model insulated from cyclical volatility, this regulated utility is positioned to deliver reliable returns through the end of the decade—and beyond.

Why Regulated Utilities Are Recession-Proof

Regulated utilities like Edison operate in a unique economic sweet spot. Their revenue streams are derived from long-term, fixed-fee contracts with customers and regulators, shielding them from commodity price swings or demand fluctuations. For Edison, which manages California’s power grid, the state’s regulatory framework ensures stable cash flows even during economic downturns. This model proved its worth during the 2008 financial crisis, when utilities outperformed the broader market by a wide margin.

Edison International’s Dividend Machine

• Dividend Yield: 6.45% as of May 2025, well above the broader market’s average.
• Growth Track Record: 21 consecutive years of dividend increases, with a 5.57% annualized growth rate over the past decade.
• Payout Ratio: Improved to 95.69% in 2025 from a peak of 140% in 2024, signaling better earnings alignment with dividends.

Key Drivers of Resilience

1. Regulatory Tailwinds: California’s push for carbon neutrality by 2045 guarantees steady investment in grid modernization and renewable energy. Edison plans to spend $7 billion annually through 2028 on projects like wildfire prevention, solar farms, and battery storage.
2. Inflation Protection: Regulated utilities pass through costs to customers via rate adjustments, ensuring revenue keeps pace with inflation. Edison’s contracts include annual escalators to further mitigate inflation risks.
3. Low Debt Risk: With a BBB+ credit rating, Edison maintains a conservative capital structure, funding expansion through cash flow and debt rather than equity dilution.

Navigating Challenges

No stock is without risks. Edison faces legal headwinds from wildfire liabilities and rising regulatory scrutiny. However, its $80 fair value estimate (per Morningstar, as of February 2025) suggests the market has already discounted these concerns. The company’s 36% discount to fair value creates a margin of safety for long-term investors.

How Does EIX Compare to Peers?

• Brookfield Renewable (BEP): Offers a 6.53% yield but operates in a more capital-intensive, project-driven sector. Its payout relies on global renewable energy demand, which carries geopolitical and execution risks.
• Verizon (VZ): At 6.5%, Verizon’s telecom business is stable, but its exposure to competition and technology shifts (e.g., 5G rollout costs) introduces operational uncertainty.

Conclusion: A Decade-Long Holding with Built-In Safeguards

Edison International is more than a dividend play—it’s a capital preservation asset. Its regulated utility model, California’s clean energy mandates, and a dividend payout ratio now within sustainable limits (95.69%) position it to thrive through economic cycles.

The data underscores its resilience:
- During the 2007–2009 recession, utilities like Edison fell only 22% on average, far outperforming the S&P 500’s 55% decline.
- Its current valuation at 36% below fair value offers a cushion against downside risks.
- With $7 billion/year in regulated investments, the dividend growth engine remains intact.

Investors seeking income that can weather recessions, inflation, or geopolitical turmoil should consider EIX. Its 6.45% yield and fortress-like balance sheet make it a rare find in today’s market—a stock you can confidently buy and hold through 2030 and beyond.