I recently purchased AEP and I am surprised and somewhat concerned over the daily price changes. It has a very low Beta and I do not understand why the price movements. I purchased the shares for income and safety. Does anyone have any insights?
Don't be too overly concerned with a few days movements. the utility sector has been under pressure for the past 2-3 weeks, since the end of March.
I, too, own a few utes like AEP, DUK, and HE. All have been hammered in this downturn, but looks like HE is recovering the fastest.
Just be patient, and enjoy the dividends while you wait. I also bought AEP recently, and like you am currently under water.
If you want to boost return by a few basis points, look at selling covered calls, a few months out, at a strike price higher than what you bought. Then, if the stock rises and gets called away, at least you have some profit and can buy back later on - when the next downturn comes.
I have been more worried about DUK. I ran a comparison chart of DUK and ED which lead me to believe the strong market is responsible for utility drops but, look at adding AEP to the mix. Maybe AEP strength is due to merger talks. At any rate,I do have a concern that deals with the feds to accept the DUK/PGN merger may be detrimental to future profits. Any comments?
Stocks go up and stocks go down. It is the way of the market. Buy and hold, is the way for those who buy for income. The only reason to sell is if there is a fundamental change for the company, not the daily up/down of the day traders. I've held thoughout the last several years in my income stocks. Some, like MSB I doubled down when it went nicely below my average per share of 15, and now my average is 13 and the stock is around 30, plus royalties to die for over a four quarter period.
If you cannot stand the heat, you really shouldn't be in the kitchen. Since I bought AEP, I'm up over my costs and 5.5% on invested dollars.