![]() These results were driven by commercial and industrial normalized GWh sales growth rates of 7.8% and 5.1%, respectively. AEP's total normalized gigawatt hours or GWh sales increased by 3.3% during the quarter. The utility's operating revenue rose by 2.2% year over year to $4.7 billion in the quarter. Unusually Mild Weather Weighed On First-Quarter ResultsĮarlier this month, AEP shared its financial results for the first quarter of 2023 ended March 31. Seeing as AEP believes that it will deliver 6% to 7% annual operating EPS growth in the long run, I am confident in reiterating my 6.25% annual dividend growth rate from my previous article on the stock. Over the long haul, I predict that the company's operating EPS payout ratio will hang around the low- to mid-60% range. Stacked against the expected dividend per share obligation of $3.37 (assuming a Q4 dividend per share of $0.88), this would be equivalent to a 63.7% operating EPS payout ratio. This payout ratio is also positioned to remain in the low-60% range for 2023: AEP anticipates that it will generate midpoint operating EPS of $5.29 ( $5.19 to $5.39) in 2023. Along with debt and equity issuances, this payout ratio leaves the company with enough capital to continue upgrading and expanding its electric utility infrastructure to support a growing business. ![]() Against the $3.17 in dividends per share paid during the year, this equates to an operating EPS payout ratio of 62.3%. This is because AEP logged $5.09 in operating EPS in 2022. And the good news is that this dividend seems to be viable moving forward. A Sustainable, Market-Topping PayoutĬompared to the average respective 1.65% and 3.41% dividend yields of the S&P 500 index and the regulated electric utility industry, AEP's 3.61% dividend yield is intriguing. For the first time since last May, I will elaborate on American Electric Power's (after this known as AEP) fundamentals and my fair value estimate of the stock. One quality stock that is a core utility holding within my portfolio is the electric utility, American Electric Power ( NASDAQ: AEP ). For clarity, I define this as the point at which passive income exceeds expenses for an investor. When executed properly, the dividend growth investing strategy can help mom-and-pop investors to achieve financial independence.
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