XLU - American Electric Power: High Yielding Critical Infrastructure On Sale
2024-03-23 00:52:06 ET
Summary
- AEP is a well-run power utility operating generation and transmission infrastructure in a number of key U.S. markets.
- Interest costs are increasing, but balance sheet optimization by management and organic EPS growth should outweigh the headwinds.
- As rates come back down, we expect that the multiple should expand back to historical averages. Right now, shares appear highly attractive.
- We think AEP has double-digit capital appreciation potential in the coming years, and with a 4.3% dividend, you get paid to wait.
- We rate AEP a 'Buy'.
American Electric Power ( AEP ) is one of the largest electric utilities in the United States.
Only smaller than a handful of competitors, including NextEra Energy ( NEE ), Southern Co ( SO ), Duke ( DUK ), and Constellation Energy ( CEG ), the company is an agglomeration of generation, transmission, and distribution subsidiaries that serve electricity to a portion of the eastern seaboard, as well as the midwestern United States....
American Electric Power: High Yielding Critical Infrastructure On Sale