AEP vs SRE: Dividend Yield, Growth & Safety Comparison
American Electric Power Co Inc (AEP) and Sempra (SRE) are both in the Utilities sector, making them natural rivals for dividend investors. Both stocks offer similar yields — AEP at 3.07% and SRE at 2.85%. For dividend growth, AEP leads with a 5-year CAGR of 13.4% versus SRE's 4.1%. AEP holds the edge in dividend safety with a "Safe" rating. Both are classified as Dividend Contenders.
Key Metrics Comparison
| Metric | AEP | SRE |
|---|
| Dividend Yield | 3.07% | 2.85% |
| Annual Dividend | $3.72 | $2.56 |
| 5-Year CAGR | 13.4% | 4.1% |
| Payout Ratio | 54% | 79% |
| Consecutive Years | 16 | 15 |
| Price | $129.48 | $94.71 |
Yield Comparison
American Electric Power Co Inc (AEP) currently yields 3.07%, which is solid for the broader market. That's 0.22% more than Sempra (SRE), which yields 2.85%. In dollar terms, AEP pays $3.72/share annually versus SRE's $2.56/share.
Dividend Growth
Over the past five years, AEP has grown its dividend at a 13.4% CAGR compared to SRE's 4.1%. 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%. SRE: Dividend growth has been steady, with a 3-year CAGR of 4.1% and a 5-year CAGR of 4.1% (10-year: 6.1%).
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. SRE's dividend safety is rated "Moderate." The payout ratio of 79% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.3x. AEP's payout ratio of 54% is more conservative than SRE's 79%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in AEP generates approximately $307/year in dividend income, compared to $285/year from SRE — a difference of $22/year. At $100,000, that gap widens to $220/year.
Verdict
- Best for income: AEP
- Best for growth: AEP
- Best for safety: AEP
Frequently Asked Questions
Which has a higher dividend yield, AEP or SRE?
American Electric Power Co Inc (AEP) has a higher dividend yield of 3.07% compared to Sempra (SRE) at 2.85%.
Is AEP or SRE 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 Sempra's 4.1%.
Which is safer for dividend income, AEP or SRE?
American Electric Power Co Inc's dividend safety is rated "Safe" while Sempra 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 79% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.3x.
How much income does $10,000 in AEP vs SRE generate?
A $10,000 investment in AEP generates approximately $307/year in dividends, while the same amount in SRE generates about $285/year.
Is AEP or SRE a Dividend Aristocrat?
American Electric Power Co Inc is a Dividend Contender (16 years) and Sempra is a Dividend Contender (15 years).
Which has a lower payout ratio, AEP or SRE?
American Electric Power Co Inc has a lower payout ratio of 54% compared to Sempra's 79%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
AEP vs SRE: which is better for retirement income?
It depends on your priorities. AEP for current income, AEP for dividend growth, AEP for safety. Many retirement investors hold both for diversification.
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