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AES’s Dividends: Premium Yield and Superior Dividend Growth

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Jan. 3 2019, Updated 6:00 p.m. ET

Dividend yield

AES (AES) is currently trading at a dividend yield of 3.8%, higher than utilities’ (XLU) average yield of 3.4%. AES’s five-year average dividend yield is close to 2.8%. It declared a per share dividend of $0.137 on December 10, and the ex-dividend date for it is January 31. AES’s recent dividend was an increase of 5% considering its dividends in the comparable period last year. In comparison, the industry average annual dividend growth is also around similar levels.

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Dividend growth

AES increased its dividends per share by 26% compounded annually in the last five years. However, it has a shorter dividend payment history, as it started paying shareholders in 2012. Utilities at large managed to increase their dividends by approximately 4% in the same period.

AES generates a large portion of its earnings from competitive operations. It has operations spread across 16 countries, which also makes its earnings volatile. Thus, its earnings and eventually dividends are less stable. On the other hand, regulated operations usually enable stable and predictable earnings, which eventually facilitates stable dividends.

PPL (PPL) and Xcel Energy (XEL) are among the top regulated utilities in the country. They trade at a dividend yield of 5.8% and 3.1%, respectively. PPL is the highest yielding utility stock, and you can learn more about its dividend profile in How PPL’s Dividend Profile Looks Going into 2019.

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