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Regulated utilities are traditionally known for their dividend-producing prowess, and
Edison International(EIX - Get Report) is no exception. The California-based company currently pays out a quarterly 32.5-cent dividend check, giving investors a 2.9% yield at current price levels. But I think that there's room for a bigger payout in Edison in the next quarter.
Edison owns a regulated utility business in Southern California, as well as a wholesale power generation arm that's based in the Midwest. That combination means that EIX pays out a somewhat lower dividend than more utility-focused peers, but the generation business adds the possibility for much more significant earnings surprises than a pure-play regulated power company could offer.
Because Edison operates in a geographically attractive region where electricity demand is high and supply is limited, the firm should be able to generate stable growth by building out its infrastructure. The firm currently has enough wherewithal on its balance sheet to finance that sort of capital spending program, and its earnings performance over the last few years already justify a fairly big dividend hike.
Investors looking for power utility exposure should give EIX a second look ahead of its Oct. 29 earnings call.