American Electric Power Company (NYSE:AEP) — This holding company for a number of electric utilities, mainly in the central and south central part of the United States, is known for its consistent earnings and dividend policy. In October, it declared a 9.5% increase in its dividend, which is now $1.88, providing a dividend yield of 4.71%. Last week, AEP reported fourth-quarter earnings of 40 cents, which matched consensus estimates.
The Trade of the Day first recommended AEP on Nov. 28, at $37.83, when it pulled back to its 200-day moving average at the bottom of a “V” formation following the completion of a seven-month “W” formation.
Almost immediately the stock reversed from its 200-day moving average, jumping to a new high at just under $42. Now it appears that profit-taking could drive AEP to its 200-day moving again, this time at just under $39, where it should stabilize and reverse to another new high over $42.
AEP is an ideal high-yield stock for quality oriented investors to accumulate. With its dividend yield and consistent performance with a longer-term objective of $46, this conservative stock could total an annual return of over 23%.