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Analyzing AES’s Valuation and Bright Upside Potential

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Part 4
Analyzing AES’s Valuation and Bright Upside Potential PART 4 OF 6

Comparing AES’s Dividend Profile with Its Peers

AES’s dividends

AES (AES) is one of the fastest growing utility companies in the sector. It targeted 8%–10% earnings growth, which is expected to drive its dividend growth. AES paid a quarterly dividend of $0.12 per share in 1Q17 and posted an annual rise of 9%.

Utilities’ average dividend growth rate is near 4%–6%. AES expects a dividend growth rate of over 10% through 2020. Its dividend profile is strong considering its high dividend growth rate.

Comparing AES’s Dividend Profile with Its Peers

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AES’s dividend yield

Currently, AES is trading at a dividend yield of 4.2%—well above the industry average. The Utilities Select Sector SPDR (XLU) is trading at a yield of 3.5%. Duke Energy (DUK) and Southern Company’s (SO) dividend yield is ~4.3%.

AES’s annual dividend growth target of 10% falls roughly in line with NextEra Energy (NEE) and Dominion Resources’ (D) expected dividend growth. However, its should be noted that NextEra Energy’s dividend yield is near 3%.

To learn more about NextEra Energy’s dividends, read Why NextEra Energy Could Be a Sensible Dividend Option.

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