AEP vs SO: Dividend Yield, Growth & Safety Comparison
American Electric Power Co Inc (AEP) and Southern Co (SO) are both in the Utilities sector, making them natural rivals for dividend investors. Both stocks offer similar yields — AEP at 3.07% and SO at 3.22%. For dividend growth, AEP leads with a 5-year CAGR of 13.4% versus SO's 2.9%. AEP holds the edge in dividend safety with a "Safe" rating. AEP is a Dividend Contender while SO is a Dividend Aristocrat.
Key Metrics Comparison
| Metric | AEP | SO |
|---|
| Dividend Yield | 3.07% | 3.22% |
| Annual Dividend | $3.72 | $2.92 |
| 5-Year CAGR | 13.4% | 2.9% |
| Payout Ratio | 54% | 73% |
| Consecutive Years | 16 | 25 |
| Price | $129.48 | $94.53 |
Yield Comparison
Southern Co (SO) currently yields 3.22%, which is solid for the broader market. That's 0.15% more than American Electric Power Co Inc (AEP), which yields 3.07%. In dollar terms, SO pays $2.92/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 SO's 2.9%. 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%. SO: Dividend growth has been steady, with a 3-year CAGR of 2.8% and a 5-year CAGR of 2.9% (10-year: 6.4%).
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. SO's dividend safety is rated "Moderate." The payout ratio of 73% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.4x. AEP's payout ratio of 54% is more conservative than SO's 73%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in SO generates approximately $322/year in dividend income, compared to $307/year from AEP — a difference of $15/year. At $100,000, that gap widens to $150/year.
Verdict
- Best for income: SO
- Best for growth: AEP
- Best for safety: AEP
Frequently Asked Questions
Which has a higher dividend yield, AEP or SO?
Southern Co (SO) has a higher dividend yield of 3.22% compared to American Electric Power Co Inc (AEP) at 3.07%.
Is AEP or SO 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 Southern Co's 2.9%.
Which is safer for dividend income, AEP or SO?
American Electric Power Co Inc's dividend safety is rated "Safe" while Southern Co is rated "Moderate." 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 73% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.4x.
How much income does $10,000 in AEP vs SO generate?
A $10,000 investment in AEP generates approximately $307/year in dividends, while the same amount in SO generates about $322/year.
Is AEP or SO a Dividend Aristocrat?
American Electric Power Co Inc is a Dividend Contender (16 years) and Southern Co is a Dividend Aristocrat (25 years).
Which has a lower payout ratio, AEP or SO?
American Electric Power Co Inc has a lower payout ratio of 54% compared to Southern Co's 73%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
AEP vs SO: which is better for retirement income?
It depends on your priorities. SO for current income, AEP for dividend growth, AEP for safety. Many retirement investors hold both for diversification.
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