I have been a lurker here for a fair amount of time and I made my first what I hope to be my only purchase of AEP. I bought in at 16 and have plans of doubling my position at 12 then 8 and then holding for long term. I have been warned of trying to catch falling knives. I have done this purchase with the expectation that management will be under tremendous pressure to cut the dividend -- probably in half -- and I would not be surprised if they did. If that happens I would expect to see the price drop to at least 12 and maybe 8.
From reviewing the financials it appears that AEP is sound company but is facing a number of short term problems that should be worked out in two to three years.
I would be interested in hearing comments on my plan.
Thank you in advance.
I'm with ya baby. Wooooooohooooo... I bought a few thousand today at $15.49. What a terrific day! Now we just need to hold the line above $20. Should I keep a few shares as part of a core holding. I like the dividend, especially at my price. Yet, I don't know if AEP can keep paying a $2.40 dividend. I lost big $$$ on CMS because I listened to their management's BS about keeping the dividend. Thoughts?
Is your objective income or capital gains. If it is income you don't need AEP. You could go Reits and sleep better, e.g. CIP,O,USV,MRR. If it is Capital Gains, you might have to wait for a few years. Yes, the Div is safe for now.
I don't understand doubling up. Why not just add a little at a time under book value?
Thank you for the comments.
My plan with AEP is long term looking for both income and capital gains. As I said in my first post I hope this is my only purchase because I do not want to see a price of 12 or 8.
Unless there is some restatement of earnings or some other very bad news the reasons for doubling up is just reinforcing my first decision to buy. I think 16 is a great buy at this point in time -- 12 would be better -- 8 better yet. I could have purchased over twice as many shares today but the stock price tomorrow can only be conjectured. I would rather invest (bet) only some of my money today with the potential lower price of AEP that may or may not come.
Doubling up at lower prices just gives me a better long term position for both income and capital gains. I say this with the information I have today. If things change I will be singing a different tune. I hope I have good plan.