Safe: American Electric Power
For the past couple years, American Electric Power (NYSE:AEP) has battled headwinds including deregulation in Ohio and increased plant costs and environmental regulations. Industrial demand also remains soft in its area — a factor in last week’s first-quarter earnings miss.
But the utility, which provides service in 11 states, reported growth in residential and commercial power demand. And with rising natural gas prices, AEP is looking to coal for generation.
The stock looks overvalued based on a price/earnings-to-growth (PEG) ratio of 4.4 and a forward P/E of 15.5; it also hit a new all-time high last week. However, AEP increased its dividend last week, too — for a current yield of 3.88% — and has reliably paid its quarterly dividend for more than a century.