No. 14: American Electric Power: Keep cool on AEP dividends
By PHIL MULKINS World Staff Writer on Sep 15, 2013, at 2:29 AM Updated on 9/15/13 at 7:46 AM
AEP-PSO field revenue specialist Brian Gross changes out old meters to install new smart meters at a University of Tulsa campus apartment complex. Courtesy
Investment Guide
Strong management and a good track record are just a couple of reasons why some investment professionals ranked Laredo Petroleum Holdings Inc. among their top picks.
SemGroup Corp. has been navigating in unchartered territory since the company filed for bankruptcy in 2008, but the energy products transportation and storage firm will soon be without the leader who guided it through choppy waters.
CONTACT THE REPORTER
918-581-8339
Email
American Electric Power stock is a good place to park your cash if you don't like the fact regular savings accounts and certificates of deposits pay rates well below the annual inflation rate, which is on pace to equal 2 percent this year.
AEP pays a stock dividend with a more than 4.5 percent annual percentage yield. Founded in 1906, AEP has more than 350,000 investors and has paid stock dividends for 100 years and probably always will - at least until summer freezes over.
Keith Goddard, CEO of Capital Advisors Inc., said, "The lack of yield in other investment instruments makes American Electric Power a logical choice as its dividend is attractive, relative to other falling yields elsewhere in the sock and bond markets. The dividend is safe and they should be able to grow the dividend in line with the rate of inflation, making stock an attractive alternative to bonds.
"There aren't a lot of alternatives to the stock market now, thus the logic for AEP. If you could get 6.5 percent from a government bond. I wouldn't buy AEP at 4.59 percent. You can't, so dividend-paying stocks are benefiting from that.
"There are almost no stocks in the 6 percent dividend range but you can still get 4 to 4.5 percent in sectors like utilities and real estate investment trusts but those are in the 4 to 4.5 percent range. It is very difficult to find those kinds of yields and certainly not in the bond market," he said.
American Electric Power's 2013 second-quarter statement says its earnings growth strategy was on track with continued investment in the regulated businesses and cost controls are on target. Its average stock price was $40.56 over the past five months; its 52-week high was $51.60, and its 52-week low was $40.56 per share.
"The inflation rate has come down significantly this year and the latest readings, year over year, was only 1.8 percent," said Goddard. "The general feeling about the calendar year is it will be around 2 percent. No matter how you slice it you're going backwards but it's not as bad as it has been in the past (3.6 percent to 4 percent inflation)."
American Electric Power
Address: 1 Riverside Plaza, Columbus, OH, 43215-2372
Phone: 614-716-1000
Web: www.aep.com
Chairman: Michael G. Morris
President/CEO: Nick Akins
Symbol (Exchange): AEP (NYSE)
Operation: One of the largest electric utilities in the U.S., serving more than 5.3 million customers in 11 states.
Phil Mulkins 918-699-8888
phil.mulkins@tulsaworld.com
Original Print Headline: Keep cool on AEP dividends
Investment Guide
Strong management and a good track record are just a couple of reasons why some investment professionals ranked Laredo Petroleum Holdings Inc. among their top picks.
SemGroup Corp. has been navigating in unchartered territory since the company filed for bankruptcy in 2008, but the energy products transportation and storage firm will soon be without the leader who guided it through choppy waters.
CONTACT THE REPORTER
918-581-8339
Email
