AEP - American Electric Power: Double-Digit Upside Potential With Interest Rate Cuts

2024-02-06 03:53:12 ET

Summary

• Utilities sector presents a buying opportunity with potential price recovery due to anticipated rate cuts.
• American Electric Power has invested in wires and renewables, with plans for capital allocation towards these areas through 2027.
• AEP offers a solid dividend yield of 4.4% and has a strong liquidity position. The dividend is safe and has grown for 14 consecutive years.

Overview

While the utilities sector as a whole hasn't been too popular lately, I believe that we are in the midst of a great buying opportunity . The utilities sector operates on a consistent basis considering they offer a product and service we all need. However, I believe the price has been suppressed by the rising interest rates. Now that we are on the horizon of anticipated rate cuts this year, I think it is likely we will see a nice price recovery. In the meantime, we have the opportunity to collect a 4.4% yield as we wait for the market conditions to turn more favorable for AEP....

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