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Duke Energy Corp (DUK), American Electric Power Company Inc (AEP): Utilities Are Still Dependable

Moreover, American Electric Power Company Inc (NYSE:AEP) is committed to make its balance sheet stronger; it has lowered its total debt to capitalization from 57.2% in 2009 to a current level of 55%, something that increases its financial flexibility. Furthermore, the company has increased its pension liability funding by 20% in last four years to a healthy level of 94%.

The following table shows the annual dividend for American Electric Power Company Inc (NYSE:AEP).

2010 2011 2012 2013
Dividend $1.71 $1.85 $1.90 $1.96*


With a dividend yield of 4.40%, Consolidated Edison, Inc. (NYSE:ED) has remained eye-catching for the investors. The company operates with two regulated utilities (division), Orange & Rockland and Consolidated Edison, Inc. (NYSE:ED) of New York. The company has limited commodity exposure as supply costs increase is passed on to customers.

The company currently pays quarterly dividend of $0.615, making an annualized dividend of $2.46. A high dividend yield of 4.40% is supported by an impressive operating cash flow yield of 12% As a result, I believe that the dividends offered by the company are sustainable.

Consolidated Edison, Inc. (NYSE:ED) is a high quality utility company which has delivered satisfactory financial performance in the recent past. Over the past three years, the company has increased its earnings by 7%.

Foolish conclusion
All three companies discussed above offer high dividend yields that are backed by the companies’ healthy cash flow yields. Furthermore, all three companies have been registering satisfactory and consistent financial performance in recent years. As a result, these stocks remain popular for income seeking investors. Despite the fact that 10-year Treasury rates are on the rise, I believe that utility stocks will continue to be an important part of income portfolios.

Faizan Chudhry has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Faizan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Utilities Are Still Dependable originally appeared on is written by Faizan Chudhry.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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