AEP vs XEL: Dividend Yield, Growth & Safety Comparison
American Electric Power Co Inc (AEP) and Xcel Energy Inc (XEL) are both in the Utilities sector, making them natural rivals for dividend investors. Both stocks offer similar yields — AEP at 3.07% and XEL at 2.94%. For dividend growth, AEP leads with a 5-year CAGR of 13.4% versus XEL's 11.5%. AEP holds the edge in dividend safety with a "Safe" rating. AEP is a Dividend Contender with 16 years of consecutive increases.
Key Metrics Comparison
| Metric | AEP | XEL |
|---|
| Dividend Yield | 3.07% | 2.94% |
| Annual Dividend | $3.72 | $2.28 |
| 5-Year CAGR | 13.4% | 11.5% |
| Payout Ratio | 54% | 67% |
| Consecutive Years | 16 | 1 |
| Price | $129.48 | $81.32 |
Yield Comparison
American Electric Power Co Inc (AEP) currently yields 3.07%, which is solid for the broader market. That's 0.13% more than Xcel Energy Inc (XEL), which yields 2.94%. In dollar terms, AEP pays $3.72/share annually versus XEL's $2.28/share.
Dividend Growth
Over the past five years, AEP has grown its dividend at a 13.4% CAGR compared to XEL's 11.5%. 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%. XEL: Dividend growth is accelerating — the 3-year CAGR of 16.6% exceeds the 5-year rate of 11.5% and the 10-year rate of 8.5%.
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. XEL's dividend safety is rated "Moderate." The payout ratio of 67% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.5x. AEP's payout ratio of 54% is more conservative than XEL's 67%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in AEP generates approximately $307/year in dividend income, compared to $294/year from XEL — a difference of $13/year. At $100,000, that gap widens to $130/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 XEL?
American Electric Power Co Inc (AEP) has a higher dividend yield of 3.07% compared to Xcel Energy Inc (XEL) at 2.94%.
Is AEP or XEL 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 Xcel Energy Inc's 11.5%.
Which is safer for dividend income, AEP or XEL?
American Electric Power Co Inc's dividend safety is rated "Safe" while Xcel Energy Inc 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 67% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.5x.
How much income does $10,000 in AEP vs XEL generate?
A $10,000 investment in AEP generates approximately $307/year in dividends, while the same amount in XEL generates about $294/year.
Is AEP or XEL a Dividend Aristocrat?
American Electric Power Co Inc is a Dividend Contender with 16 consecutive years of increases. Xcel Energy Inc does not currently qualify for aristocrat status.
Which has a lower payout ratio, AEP or XEL?
American Electric Power Co Inc has a lower payout ratio of 54% compared to Xcel Energy Inc's 67%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
AEP vs XEL: 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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