uploads///AES stk

Analyzing AES’s Dividend Yield and Valuation

By

Jan. 18 2018, Published 9:47 a.m. ET

Dividend yield

AES (AES), a competitive utility, is trading at a dividend yield of 4.7%—compared to broader utilities’ average yield of 4.4%. AES is one of the smaller constituents of the S&P 500 Utilities Index. However, its dividend growth in the last few years has been exceptional—significantly higher than utility giants. While AES’s annualized dividends have risen at a compound annual growth rate of 35% over the last three years, broader utilities (XLU) have raised their dividends by an average of 4%–6%.

To learn about the dividend profiles of the top utilities in the sector, read Analyzing the Largest S&P 500 Utilities’ Dividend Profiles.

Article continues below advertisement

Valuation

On January 12, 2018, AES stock was trading at an EV-to-EBITDA multiple of 8.7x. Its five-year historical EV-to-EBITDA multiple is just above 7x. Currently, broader utilities’ average valuation is close to 10.5x. AES seems to be trading at an attractive valuation compared to its peers. It appears to be trading at a premium to its historical valuation.

Exelon (EXC), the largest competitive utility, is trading at a valuation multiple of 8.0x—close to its five-year average. FirstEnergy’s (FE) valuation multiple is ~8.5x.

Next, we’ll discuss AES’s returns compared to its peers.

Advertisement

More From Market Realist

  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market RealistLogo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.