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Reasons to Add American Electric Power (AEP) to Your Portfolio
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American Electric Power Company, Inc. (AEP - Free Report) continues to benefit from strategic investments in upgrading the transmission and distribution system. American Electric Power’s widespread distribution line and expanding renewable assets through organic and inorganic initiatives are likely to drive its performance.
The Zacks Consensus Estimate for American Electric Power’s 2022 earnings has moved up by 0.4% in the past 60 days to $5.01 per share.
AEP’s long-term (three to five years) earnings growth is projected at 6.2%.
The company delivered an average earnings surprise of 2.4% in the last four quarters.
Dividend
American Electric Power has a long history of dividend payments and has paid out dividends to shareholders consecutively since 1971. It targets a dividend payout ratio in the range of 60-70%. On Apr 26, 2022, American Electric Power’s board of directors approved a 5.4% increase in the quarterly dividend to 78 cents per share from 74 cents in 2021. This is AEP’s 448th consecutive quarterly common stock cash dividend.
Currently, American Electric Power has a dividend yield of 3.4% compared with the industry average of 3.3%.
Investments
American Electric Power owns the nation's largest electricity transmission system and more than 224,000 miles of distribution lines. It plans to invest $30.7 billion over the 2023-2026 period in core regulated operations, contracted renewables and wires. For 2022, AEP forecasts nearly $7.6 billion in capital expenditures. American Electric Power also aims to invest nearly $24.8 billion in the transmission and distribution business during the 2022-2026 period to construct a more efficient grid and deliver custom energy solutions to customers.
American Electric Power’s investment strategy also includes incremental investments in renewable generation projects across the United States. The 2022-2026 capital investment forecast includes $8.2 billion in the regulated renewable plan.
Return on Equity
Return on Equity (“ROE”) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, American Electric Power’s ROE is 10.6%, higher than the industry average of 10.4%. This indicates that the company is utilizing the funds more effectively than industry peers.
Price Performance
In the past six months, American Electric Power’s stock has risen 4.8% against the industry’s 7% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other similar-ranked stocks in the Zacks Utility sector include Sempra Energy (SRE - Free Report) , WEC Energy Group (WEC - Free Report) and Global Water Resources (GWRS - Free Report) .
The long-term earnings growth of Sempra Energy, WEC Energy Group and Global Water Resources is projected at 5.6%, 6.1% and 15%, respectively.
The Zacks Consensus Estimate for 2022 earnings per share of Sempra Energy, WEC Energy Group and Global Water Resources has moved up 0.7%, 6.3% and 25% year over year, respectively.
SRE, WEC and GWRS delivered an average earnings surprise of 2.8%, 8.6% and 154.2%, respectively, in the last four quarters.
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Reasons to Add American Electric Power (AEP) to Your Portfolio
American Electric Power Company, Inc. (AEP - Free Report) continues to benefit from strategic investments in upgrading the transmission and distribution system. American Electric Power’s widespread distribution line and expanding renewable assets through organic and inorganic initiatives are likely to drive its performance.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projection & Surprise History
The Zacks Consensus Estimate for American Electric Power’s 2022 earnings has moved up by 0.4% in the past 60 days to $5.01 per share.
AEP’s long-term (three to five years) earnings growth is projected at 6.2%.
The company delivered an average earnings surprise of 2.4% in the last four quarters.
Dividend
American Electric Power has a long history of dividend payments and has paid out dividends to shareholders consecutively since 1971. It targets a dividend payout ratio in the range of 60-70%. On Apr 26, 2022, American Electric Power’s board of directors approved a 5.4% increase in the quarterly dividend to 78 cents per share from 74 cents in 2021. This is AEP’s 448th consecutive quarterly common stock cash dividend.
Currently, American Electric Power has a dividend yield of 3.4% compared with the industry average of 3.3%.
Investments
American Electric Power owns the nation's largest electricity transmission system and more than 224,000 miles of distribution lines. It plans to invest $30.7 billion over the 2023-2026 period in core regulated operations, contracted renewables and wires. For 2022, AEP forecasts nearly $7.6 billion in capital expenditures. American Electric Power also aims to invest nearly $24.8 billion in the transmission and distribution business during the 2022-2026 period to construct a more efficient grid and deliver custom energy solutions to customers.
American Electric Power’s investment strategy also includes incremental investments in renewable generation projects across the United States. The 2022-2026 capital investment forecast includes $8.2 billion in the regulated renewable plan.
Return on Equity
Return on Equity (“ROE”) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, American Electric Power’s ROE is 10.6%, higher than the industry average of 10.4%. This indicates that the company is utilizing the funds more effectively than industry peers.
Price Performance
In the past six months, American Electric Power’s stock has risen 4.8% against the industry’s 7% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other similar-ranked stocks in the Zacks Utility sector include Sempra Energy (SRE - Free Report) , WEC Energy Group (WEC - Free Report) and Global Water Resources (GWRS - Free Report) .
The long-term earnings growth of Sempra Energy, WEC Energy Group and Global Water Resources is projected at 5.6%, 6.1% and 15%, respectively.
The Zacks Consensus Estimate for 2022 earnings per share of Sempra Energy, WEC Energy Group and Global Water Resources has moved up 0.7%, 6.3% and 25% year over year, respectively.
SRE, WEC and GWRS delivered an average earnings surprise of 2.8%, 8.6% and 154.2%, respectively, in the last four quarters.