AEP vs ES: Dividend Yield, Growth & Safety Comparison
American Electric Power Co Inc (AEP) and Eversource Energy (ES) are both in the Utilities sector, making them natural rivals for dividend investors. ES offers a significantly higher 4.29% yield compared to AEP's 3.07%, a gap of 1.22%. For dividend growth, AEP leads with a 5-year CAGR of 13.4% versus ES's 5.7%. AEP holds the edge in dividend safety with a "Safe" rating. AEP is a Dividend Contender while ES is a Dividend Aristocrat.
Key Metrics Comparison
| Metric | AEP | ES |
|---|
| Dividend Yield | 3.07% | 4.29% |
| Annual Dividend | $3.72 | $2.97 |
| 5-Year CAGR | 13.4% | 5.7% |
| Payout Ratio | 54% | 82% |
| Consecutive Years | 16 | 26 |
| Price | $129.48 | $73.58 |
Yield Comparison
Eversource Energy (ES) currently yields 4.29%, which is attractive for the broader market. That's 1.22% more than American Electric Power Co Inc (AEP), which yields 3.07%. In dollar terms, ES pays $2.97/share annually versus AEP's $3.72/share.
Dividend Growth
Over the past five years, AEP has grown its dividend at a 13.4% CAGR compared to ES's 5.7%. AEP: Dividend growth is accelerating — the 3-year CAGR of 21.3% exceeds the 5-year rate of 13.4% and the 10-year rate of 9.1%. ES: Dividend growth has been steady, with a 3-year CAGR of 5.6% and a 5-year CAGR of 5.7% (10-year: 6.0%).
Dividend Safety
AEP's dividend safety is rated "Safe." The payout ratio of 54% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.8x. ES's dividend safety is rated "At Risk." The payout ratio of 82% is elevated, which may indicate the dividend could be cut if earnings decline. Earnings cover the dividend 1.2x. AEP's payout ratio of 54% is more conservative than ES's 82%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in ES generates approximately $429/year in dividend income, compared to $307/year from AEP — a difference of $122/year. At $100,000, that gap widens to $1220/year.
Verdict
- Best for income: ES
- Best for growth: AEP
- Best for safety: AEP
Frequently Asked Questions
Which has a higher dividend yield, AEP or ES?
Eversource Energy (ES) has a higher dividend yield of 4.29% compared to American Electric Power Co Inc (AEP) at 3.07%.
Is AEP or ES a better dividend growth stock?
American Electric Power Co Inc has the stronger dividend growth with a 5-year CAGR of 13.4%, compared to Eversource Energy's 5.7%.
Which is safer for dividend income, AEP or ES?
American Electric Power Co Inc's dividend safety is rated "Safe" while Eversource Energy is rated "At Risk." The payout ratio of 54% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 1.8x. The payout ratio of 82% is elevated, which may indicate the dividend could be cut if earnings decline. Earnings cover the dividend 1.2x.
How much income does $10,000 in AEP vs ES generate?
A $10,000 investment in AEP generates approximately $307/year in dividends, while the same amount in ES generates about $429/year.
Is AEP or ES a Dividend Aristocrat?
American Electric Power Co Inc is a Dividend Contender (16 years) and Eversource Energy is a Dividend Aristocrat (26 years).
Which has a lower payout ratio, AEP or ES?
American Electric Power Co Inc has a lower payout ratio of 54% compared to Eversource Energy's 82%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
AEP vs ES: which is better for retirement income?
It depends on your priorities. ES for current income, AEP for dividend growth, AEP for safety. Many retirement investors hold both for diversification.
AEP Dividend Analysis | ES Dividend Analysis | All Comparisons | Comparison Tool