I read some article on high dividend stocks and it mentioned American Electric Power (AEP). That made me curious because I hadn’t examined this company yet. This is what I found.
American Electric Power is one of the largest regulated utilities in the U.S. AEP's electric utility operating companies provide generation, transmission, and distribution services to more than 5 million retail customers in 11 states. About 80% of AEP's power is generated using coal. Approximately 55% of AEP's revenue comes from operations in Ohio, Texas, and Virginia.
American Electric Power (AEP)
Market price: $37.43
Shares: 481.79 million
Link to 3 year chart: http://bit.ly/AEP3yrChart
Dividend record: (strong dividend growth)
Dividend: $0.46 quarterly
Dividend yield: 4.92%
EPS: $2.61
Dividend payout ratio: 70% ($1.84 dividend/$2.61EPS)
This stock will become a high dividend stock (yielding 6%) at a price of $30.66 per share
Earning power: $2.50 average for five years @ 481.79 million shares
(Earning adjusted for changes in capitalization)
EPS Net inc. Adj. EPS
2006 $2.53 $1,002 M $2.08
2007 $2.72 $1,086 M $2.25
2008 $3.42 $1,380 M $2.86
2009 $2.96 $1,357 M $2.82
2010 $2.53 $1,211 M $2.51
Five year average earnings $2.50
Value price territory at 12 times average earnings begins below $30.00 per share
Market price at 14.97 times average earnings
Speculative price territory at 20 times average earnings begins above $50.00 per share
Balance sheet: Looks okay to me. The current ratio and quick ratio have me a little concerned.
Book value: $28.69
Price to book value: 1.30 (good)
Current ratio: 0.80 (over 2.0 is good)
Quick ratio: 0.51 (over 1.0 is good)
Conclusion: Add to watch list with alert set to $30.00 per share. Start deep analysis when price approaches $30.00. Sell above $50.00.
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