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ED has consistently grown dividends per share with increases each year over the past five years. The Payout Ratio over the same period has been steady ranging from ~55-70% of earnings. In 2016 the dividend per share could be as high as $2.80 based on a 70% payout ratio on $4.00 of earnings (analyst consensus). Consolidated Edison (NYSE: ED ) has arguably one of the most enticing risk-adjusted dividend yields around, at > 4%. The company has a strong track record of growing dividends per share (5 consecutive years of increases), a stable payout ratio (~55-70%), and the ability to make future increases. ED’s share price is up 11% over the last twelve months. ED data by YCharts The divided yield has increased since the start of 2015 on recent share price weakness and represents a good entry point. ED Dividend Yield (NYSE: TTM ) data by YCharts ED has consistently grown dividends per share with increases each year over the past five years. ED Dividend data by YCharts Over the past five years ED has shown steady growth in EPS with an increase from $3/share to $3.6/share. ED Normalized Diluted EPS (Annual) data by YCharts The Payout Ratio over the same period has been steady ranging from ~55-70% of earnings. I believe this is a conservative ratio and expect to see an average payout ratio of ~70% going forward. ED Payout Ratio ( TTM ) data by YCharts If we take the payout ratio expectation of 70% and apply it to analyst EPS estimates , we can get a good sense of the potential for dividend increases going forward. EPS estimates are as follows: $3.97 in 2015 $4.00 in 2016 In 2016 the dividend per share could be as high as $2.80 based on a 70% payout ratio on $4.00 of earnings. This implies a yield of 4.6% on the current share price. Given the company’s track record of 5 consecutive years of dividend increases, a reasonable payout ratio, and analyst estimates for EPS of $4.00 in 2016 ED represents a great risk adjusted opportunity. Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in ED over the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article. Share this article with a colleague