American Electric Power Co., Inc. : AEP-US: Dividend Analysis : May 10th, 2017 (record date) : By the numbers : May 9, 2017

Our analysis is based on comparing American Electric Power Co., Inc. with the following peers – Duke Energy Corporation, Westar Energy, Inc., PPL Corporation, Entergy Corporation, Dominion Resources, Inc., Exelon Corporation, NRG Energy, Inc., AES Corporation, Southern Company and Xcel Energy Inc. (DUK-US, WR-US, PPL-US, ETR-US, D-US, EXC-US, NRG-US, AES-US, SO-US and XEL-US).

American Electric Power Co., Inc.’s dividend yield is 3.44 percent and its dividend payout is 161.09 percent. This compares to a peer average dividend yield of 3.74 percent and a payout level of 62.44 percent. This combination of a relatively lower dividend yield and a higher payout ratio suggest that the dividend payout might not be sustainable. Supporting this is the company’s average dividend quality score of 42 out of a possible score of 100, which points to some weakness in being able to sustain the higher payout ratio.

Dividend Yield
Dividend Quality Score

Dividend Quality Overview

  • Over the last twelve months (prior to March 31, 2017), AEP-US paid a high quality dividend, which represents a yield of 3.40% at the current price.
  • Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 4 were medium quality and 1 was low quality.
  • The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
Dividend Quality Score Vs Dividend Yield

Quadrant label definitions. Hover to know more

High Score;High Yield, High Score;Low Yield, Low Score;Low Yield, Low Score;High Yield

Dividend Coverage

Over the last twelve months (prior to March 31, 2017), AEP-US paid a high quality dividend.

The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 4.00x), investing cash flow (coverage of -2.66x), issuance cash flow (coverage of -0.36x) and twelve-month prior cash (coverage of 0.53x), for a total dividend coverage of 1.47x.

AEP-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -0.31x).

Dividend Coverage by Cash Flow (TTM)

These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.

Dividend History

Item 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31 Latest
Dividend Yield (%) 4.4 4.17 3.34 3.69 3.61 3.44
Dividend Payout (%) 72.44 64.14 60.78 58.8 181.95 161.09

A complete list of metrics and analysis is available on the company page.

Company Profile

American Electric Power Co., Inc. is a public utility holding company that engages in the business of generation, transmission and distribution of electricity. It operates through the following segments: Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing. The Vertically Integrated Utilities segment engages in the generation, transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by its subsidiaries. The Transmission & Distribution Utilities segment engages in the business of transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by its subsidiaries. The AEP Transmission Holdco segment engages in the development, construction and operation of transmission facilities through investments in its wholly-owned transmission subsidiaries and joint ventures. The Generation & Marketing segment engages in non-regulated generation; and marketing, risk management, and retail activities. The company was founded on December 20, 1906 and is headquartered in Columbus, OH.

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