Better High-Yield Dividend Stock: Edison International vs. Energy Transfer

Key Takeaways

• Edison International yields 6.5% and Energy Transfer yields 6.8%, and both raised their payouts in the past year.
• Analysts expect Edison’s fiscal 2026 dividend to use 57% of its normalized EPS, and Energy Transfer’s distributable cash flow to cover its fiscal 2026 payout 2.1x.
• Edison hasn’t yet estimated its Eaton Fire liability, and California’s bill to limit it died on Aug. 31. Energy Transfer plans to spend $5.6 billion to $5.9 billion on growth projects in 2026.
• Edison trades at 9x forward earnings, against a five-year average of 13x.

Anyone hunting for a dividend yield above 6% is going to run into Edison International (EIX) and Energy Transfer (ET).

On July 30, Edison reaffirmed its guidance of $5.90 to $6.20 of core EPS for 2026. Energy Transfer, meanwhile, raised its 2026 Adjusted EBITDA guidance to between $18.8 billion and $19.1 billion on Aug. 4.

So which is the better high-yield dividend stock?

Edison International: steady raises, an open wildfire bill

Edison’s utility, Southern California Edison, expects its rate base to grow about 7% a year over the long term. Management expects 5% to 7% core EPS growth a year from 2025 to 2030, and CEO Pedro Pizarro said Edison doesn’t “see a need for equity through that 2030 time period.”

That growth backs the dividend. In fiscal 2025, Edison’s $3.36 a share used a comfortable 51% of its $6.55 of normalized EPS. Analysts expect $6.12 for fiscal 2026, which puts the ratio at a still-roomy 57%. The board raised the quarterly payout 6% in December.

The dividend rose every year from $1.98 a share in fiscal 2016 to $3.36 in fiscal 2025, with the payout ratio between 50% and 64% the whole way.

The risk is the Eaton Fire, and it has grown since July. On Aug. 4, the Los Angeles County Fire Department found that arcing on an out-of-service Southern California Edison tower started the fire. On Aug. 31, California’s wildfire-liability bill died without a vote, and Edison’s stock fell 23% that day. On Sept. 16, Fitch moved its outlook to negative, warning that “future rating downgrades are likely.” Edison had recorded $1.6 billion of settlement losses by June 30, and it says it can’t yet estimate the rest.

Energy Transfer: a bigger check, with growing cash behind it

Edison grows by adding to its rate base, and Energy Transfer grows by moving more through its pipes. In Q2 2026, its Adjusted EBITDA rose 31% to $5.07 billion, and its distributable cash flow attributable to partners, as adjusted, rose 32% to $2.59 billion, both against Q2 2025. NGL transportation, NGL exports and crude oil transportation all set records.

Energy Transfer is a partnership, so it pays distributions on units, and holders get a K-1 at tax time.

In fiscal 2025, $2.38 of distributable cash flow per unit covered $1.34 of distributions 1.78x. Analysts expect $2.89 for fiscal 2026, coverage of 2.11x, a wide cushion. CEO Thomas Long said the partnership is “targeting a long-term annual distribution growth rate of 3% to 5%.”

Coverage held at 1.78x or better every year from fiscal 2018 to fiscal 2025. Distributions still fell from $1.22 a unit in fiscal 2019 to $0.63 in fiscal 2021, a year when coverage hit 4.76x.

They’ve climbed back to $1.34 since then, and the latest raise was the partnership’s “nineteenth consecutive increase to its quarterly cash distribution.”

The risk is the spending: $5.6 billion to $5.9 billion of growth capital in 2026, which has to keep earning its return. On Oct. 6, it also agreed to buy Vaquero Midstream for about $2.6 billion in cash and units, a deal it expects to add to distributable cash flow per unit right away.

So which dividend wins?

Energy Transfer is the better high-yield dividend stock. It pays the bigger check today, and analysts expect its distributable cash flow to cover that check more than 2x in fiscal 2026.

Edison has a real case, though. It raised its dividend 6.0% in fiscal 2025, against 4.7% for Energy Transfer. At those paces, Edison’s income would pass Energy Transfer’s around 2030, and in year 10, $10,000 in Edison would pay about $1,098 a year, against about $1,027 from Energy Transfer.

It’s cheap, too. Edison trades at 9x forward earnings, against a five-year average of 13x and a high of 17x.

That discount is the market pricing in Edison’s wildfire risk. Energy Transfer isn’t expensive either, at 7.2x the $2.89 of distributable cash flow per unit that analysts expect for fiscal 2026.

In the end, I’d rather collect the bigger check now than wait until about 2030 for Edison’s to catch up while its biggest liability still has no number on it.

Of course, a new try in Sacramento could change that. Pizarro wants a “durable and financeable framework” for wildfire liability, and Edison’s first estimate of what the Eaton Fire will cost is the other number to watch.

So what is Energy Transfer stock actually worth?

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!