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American Electric Power Has A Nice Dividend Growth Runway

Published Wed, 10 Jul 2019 17:38:06 -0400 on Seeking Alpha

Image Source: American Electric Power Company Inc - IR Presentation
By Callum Turcan
American Electric Power (AEP) and its subsidiaries provide electric utility services to over 5 million retail customers in Midwestern, Southeastern, and Southern markets in the United States. That includes generation, transmission, and distribution services, most of which are rate-regulated utilities whose cash flows tend to be very predictable and stable. As one of the largest electric utilities in the United States, American Electric Power has the scale required to be very competitive, particularly when it comes to the ability to grow. In this article, we will cover why we see American Electric Power having a very nice dividend growth story, with shares of AEP yielding 3.0% as of this writing.
Management is targeting medium-term operating EPS growth of 5-7% CAGR, a sustainable payout ratio of 60-70% (of operating EPS), and we appreciate that American Electric Power has paid out a dividend for over 105 years. American Electric Power's forecasted operating EPS growth and relatively modest payout ratio will enable meaningful payout growth on a per share basis, a trajectory that would become greatly enhanced if the US Fed pushes interest rates lower (considering American Electric Power's large net debt load and need to tap capital markets).
Financial Overview
We expect American Electric Power will keep growing its renewable energy portfolio by continuing to build out its green power... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
SEMPRA ENERGY 143.66   20.9 6.87 3.87 2.73


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