Long payment history
The focus on utilities increased again recently amid broader market uncertainty and geopolitical issues. Utilities, due to their highly regulated and domestic-focused operations, generate a steady stream of earnings and thus pay stable dividends to shareholders. Ohio-based American Electric Power (AEP) has one of the longest dividend-payment histories among utility giants. It has paid a cash dividend for the last 108 consecutive years.
AEP recently paid a quarterly dividend of $0.67 per share, an increase of ~8% compared to its dividend in the same period last year. It is currently trading at a dividend yield of 3.1% against the industry (XLU) average yield of 3.0%. AEP’s five-year historical average dividend yield lies around 3.6%. Its dividend stability is highlighted by its long payment history and a stable yield over time. In comparison, Exelon Corporation (EXC) is trading at a dividend yield of 2.9%, and Consolidated Edison (ED) offers a yield of 3.5%.
With a long dividend streak, AEP significantly outperformed peers and even broader markets in the long term. In the last five years, total returns from AEP came in at more than 100%, while broader utilities on average returned 70%. SPY returned 66% in the same period. AEP’s strong market performance contributed to its returns.
Peers Exelon and Consolidated Edison returned 81% and 94%, respectively, in the last five years.
To learn about top utilities’ dividend profiles, read Comparing Duke Energy and Southern Company’s Dividends.