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Wednesday, 04/03/2002

AEP - American Electric Power

Company Description

American Electric Power is a multinational energy company with a balanced portfolio of energy assets. AEP, the United States' largest electricity generator, owns and operates more than 42,000 megawatts of generating capacity in the U.S. and select international markets. AEP is a leading wholesale energy marketer, ranking among North America's top providers of wholesale power and natural gas with a growing wholesale presence in European markets. In addition to electricity generation, AEP owns and operates natural gas pipeline systems, natural gas storage, coal mines, and the fourth-largest inland barge company in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP's wires. The company is based in Columbus, Ohio.

AEP has invested in the resources required to optimize its assets and emerge as a leader in the energy industry. AEP is committed to delivering earnings growth and enhancement of shareholder value through its wholesale business, which uniquely integrates generation and natural gas assets, technical and operational expertise, trading, and marketing. The company anticipates that the wholesale business will contribute sustainable double-digit earnings growth.

(Source: American Electric Power)

Reasons To Invest

The focus of AEP's growth has become its wholesale energy business. The division is dynamic in that it anticipates changes in the market environment quickly, adjusting as necessary. While its wholesale business adds volatility, it also contributes mightily to the bottom line. At least it did so during last year's mild winter and adverse impact of the economic downturn. For stability, AEP draws from its energy delivery business, which generates predictable cash flow and hedges the volatility from the wholesale business.

The company is looking for growth from its wholesale business this year through strategic developments and expansion across multiple geographies.

From a macro perspective, the broader utility sector recently broke from a long-term bearish trend that pressured the group lower for the last several months. Coming out of the breakout, the utility group could have room to run over the next several years.

The quality earnings delivered by utilities should continue to attract attention, along with the hefty dividends paid by the likes of AEP. Its annual yield is currently north of 5 percent.

DRIP Information:
Shares to Qualify = 1           Accept Foreign Accounts: Yes
Auto-reinvestment = Yes         Temper Enrollment Serv:  Yes

Min/Max Investment = $25 to $150,000/year

Reinvestment Fees -

Div : 0 
Cash: 0
Auto: 0

Transfer Agent:

First Chicago Trust


Industry Group: Electric Utility  52-week high=$51.20
Annual Dividend Per Share=  2.40  52-week low =$39.70
Last earnings 01/18   est = 0.38  actual = 0.35
Next earnings 04-25   est = 0.61  versus = 0.68
                                     P/E =   15
Analyst Ratings:
Strong Buy    =  0
Moderate Buy  =  3
Hold          = 11
Moderate Sell =  0
Strong Sell   =  0


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