Yahoo Finance American Electric Power’s Dividends: How Do They Compare?
AEP: How Is It Adapting to the Changing Utility Industry?
Modest dividend growth
In 2015, American Electric Power (AEP) paid a dividend per share of $2.18, which was a ~7% increase over the dividends of the prior year. AEP’s annual dividend growth has been 4.2% over the last five years. A higher contribution from regulated operations could improve AEP’s dividend distribution.
Dividend yields
If American Electric Power’s merchant generation unit is separated, the company’s earnings stability could increase, which could lead to higher dividends. AEP’s capital spending plan also focuses on expanding its regulated segment. This shows management’s inclination towards making AEP a pure-play regulated utility.
Currently, American Electric Power’s dividend yield stands at nearly 3.5%, close to the industry average. Large-cap peers Duke Energy (DUK) and Southern Company (SO) have higher yields, well above 4%. Midsize peers DTE Energy (DTE) and PPL (PPL) yield around 3.3% and 3.9%, respectively.
Dividend yields (DVY) of many utility stocks have fallen over the last couple of quarters. A smart uptick in utility stocks may be behind this fall. We’ll discuss utilities’ forward dividend yields in the next part of this series.
Investors can get broad-based exposure to utilities by investing in the Vanguard US Utilities ETF (VPU). American Electric Power makes up 4.3% of VPU. Peers Exelon (EXC), PG&E (PCG), and PPL Corporation (PPL) account for 3.6%, 3.9%, and 3.4%, respectively, of VPU.
Browse this series on Market Realist:
