Utility Stocks for Retirement Investors: American Electric Power Co. (AEP)
Dividend Yield: 3.6%
When it comes to buying individual utility stocks, retirement investors are looking for one thing — stability of income. Megautility American Electric Power Company Inc (NYSE:AEP) has that in spades.
AEP is one of the largest electric utilities in the United States. Its system features more than 26,000 megawatts worth of generating capacity as well as the nation’s largest electricity transmission system. It has more 765-kilovolt extra-high voltage transmission lines than the rest of the U.S.’s transmission systems put together. This vast system and the cash flows from its nearly 5.4 million customers in 11 states has allowed AEP to pay a solid dividend since its founding in 1910.
Stability aside, AEP does have some opportunities for growth in the next few years as well. The regulatory environment has thrown it a major bone.
First, the firm is pretty coal-heavy regarding its generating capacity. With the Donald Trump administration throwing water on the Clean Energy Plan, AEP should still have some time to change over capacity. Meanwhile, regulators in its central operating area of Ohio have been pretty favorable with rate hikes lately. All of this should help strengthen AEP’s 3.6% dividend in upcoming years.
For retirement investors, you certainly couldn’t do much better than AEP as a cornerstone for your portfolio.