New York City-based Consolidated Edison, Inc., a.k.a. ConEd (ED) is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. Stable regulated utility operations, gains from the sale of generation projects, a reasonably strong balance sheet, strong cash flow, regulated rate increases and earnings from non-regulated businesses collectively make Consolidated Edison a conservative income-based investment story.

ED offers an above-industry average dividend yield, competitive with Treasury yields. However, the issues of future electricity sales growth, rising cost structure, and increasing capital expenditure continue to restrain valuation.

Accordingly, with a mixed outlook, we maintain our market-neutral HOLD recommendation on ED common stock with a six-month target price of $43.00. Price appreciation to our near-term valuation target, coupled with the recently increased $0.585 per share quarterly dividend which appears sustainable assuming modest projected EPS growth represents annualized total return potential of 12.5%.