American Electric Power Co Inc's Dividend Analysis
Exploring the Sustainability and Growth of AEP's Dividends
Upcoming Dividend Details
American Electric Power Co Inc (NASDAQ:AEP) recently announced a dividend of $0.88 per share, payable on 2024-06-10, with the ex-dividend date set for 2024-05-09. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into American Electric Power Co Inc's dividend performance and assess its sustainability.
What Does American Electric Power Co Inc Do?
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American Electric Power is one of the largest regulated utilities in the United States, providing electricity generation, transmission, and distribution to more than 5 million customers across 11 states. Approximately 42% of AEP's capacity is derived from coal, with the remaining capacity sourced from natural gas (27%), renewable energy and hydro (21%), nuclear (8%), and demand response (2%). The company's diverse portfolio supports its earnings through vertically integrated utilities, transmission and distribution, and generation and marketing.
A Glimpse at American Electric Power Co Inc's Dividend History
American Electric Power Co Inc has maintained a consistent dividend payment record since 1986, with dividends distributed quarterly. Additionally, the company has increased its dividend annually since 2004, earning it the status of a dividend achievera title reserved for companies that have consistently raised their dividends for at least 20 consecutive years.
Below is a chart showing the annual Dividends Per Share to track historical trends.
Breaking Down American Electric Power Co Inc's Dividend Yield and Growth
As of today, American Electric Power Co Inc boasts a 12-month trailing dividend yield of 3.83% and a 12-month forward dividend yield of 3.95%, indicating an expected increase in dividend payments over the next year. Over the past three years, the company's annual dividend growth rate was 5.90%, slightly decreasing to 5.80% over a five-year period, and standing at 5.70% over the past decade.
Based on American Electric Power Co Inc's dividend yield and five-year growth rate, the 5-year yield on cost of American Electric Power Co Inc stock as of today is approximately 5.08%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one must evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. With a payout ratio of 0.66 as of 2024-03-31, American Electric Power Co Inc retains a significant part of its earnings, ensuring funds availability for future growth and unexpected downturns.
American Electric Power Co Inc's profitability rank is 7 out of 10 as of 2024-03-31, indicating good profitability prospects. The company has reported positive net income each year over the past decade, further solidifying its financial stability.
Growth Metrics: The Future Outlook
American Electric Power Co Inc's growth rank of 7 out of 10 suggests a good growth trajectory relative to its competitors. However, its revenue per share and 3-year revenue growth rate of 6.70% per year on average slightly underperforms approximately 59.56% of global competitors. Additionally, the company's 3-year EPS growth rate and 5-year EBITDA growth rate also indicate challenges in outperforming a significant portion of its global peers.
Conclusion
Considering American Electric Power Co Inc's consistent dividend payments, growth in dividend rates, prudent payout ratio, and solid profitability, the company presents a compelling case for value investors focused on dividend income. However, investors should also consider the company's moderate growth metrics when making long-term investment decisions. For those seeking high-dividend yield opportunities, exploring additional options through the High Dividend Yield Screener on GuruFocus may provide further insights.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
