American Electric Power Company (NYSE: AEP) is trying to show the all-clear sign and help to assure its dividend investors that it can still grow and can still keep paying out that great 4.8% dividend yield ahead. AEP was recently named in our 2012 Model Dividend Portfolio and it was also listed as one of ten Stocks to Own for the Next Decade a year ago. The AEP status remains active on both counts.
The electric power utility gave 4% to 6% earnings growth for a few years out as acceptable and it will separate its Ohio businesses. For 2012, AEP sees $3.05 to $3.25 EPS versus Thomson Reuters targets of $3.17 EPS.
AEP has noted a refocus on its transmission business and putting capital to work in the regulated generating fleet to comply with new EPA regulations. The regulated units generate a significant portion of AEP’s earnings and supports its dividend.
The company is filing with the Federal Energy Regulatory Commission to separate its Ohio businesses and it will terminate and then replace its Interconnection Agreement for its eastern generating assets under a new power cost sharing arrangement. The Public Utilities Commission of Ohio approved AEP’s plan back in January to move forward with the separation of its Ohio generation assets.
As far as FERC is concerned, the company expects that the FERC will decide on the implementation of corporate separation and the termination and replacement of the Interconnection Agreement in the first quarter of 2013.
On a day when the DJIA is down 1%, AEP is up 0.3% at $39.50 and the 52-week trading range is $33.09 to $41.98.
AEP’s dividend should not just be safe ahead… it should still grow even with the coal risks which could lie ahead.
JON C. OGG