AEP to recommend increase in dividend, boost long-term growth forecast

COLUMBUS, Ohio.– American Electric Power (NYSE: AEP) will recommend its board of directors increase the annual dividend, the company said this morning during presentations to investors and analysts in New York. AEP also increased its long-range forecast for ongoing earnings growth.

“Our operations continue to deliver excellent results and our strategic direction is sound,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “An increase in the dividend rewards our shareholders for their continued faith in the company.”

Morris said AEP management would recommend this month that the board of directors increase the annual dividend by $0.08 per share, approximately 5 percent, to $1.64 per share, or $0.41 per share each quarter beginning in December.

Morris also said the company’s long-term growth forecast has been revised to between 5 percent and 9 percent from the previous 5 percent to 7 percent range.

“Our earnings growth beyond the traditional native load growth will largely come from the return on new capital invested in our existing utility businesses,” Morris said. “As we enhance our utility infrastructure to better meet our customers’ future needs, we will be working closely with regulators to ensure we get a fair return on these investments for our shareholders.

“But customers and shareholders are not the only beneficiaries of these infrastructure investments,” Morris said. “There’s also an environmental benefit. Integrating increasingly more-efficient new technologies into our system reduces the amount of fuel we consume to supply electricity, which in turn reduces emissions. It’s a more sustainable approach to serving our customers.”

AEP refined its ongoing earnings guidance range for the current year and for 2008 and 2009. It also established ongoing earnings guidance for 2010.

Guidance for 2007 was refined to between $2.90 and $3.00 a share as the company approaches the expected Oct. 24 announcement of third-quarter 2007 earnings. Previous guidance was between $2.85 and $3.05 a share.

Ongoing earnings guidance for 2008 is between $3.05 and $3.25 per share, adjusted from the previous range of between $3.00 and $3.30 per share. Ongoing earnings guidance for 2009 is between $3.20 and $3.50 per share, adjusted from the previous range of between $3.15 and $3.45 per share. Ongoing earnings guidance for 2010 was established as between $3.45 and $3.80 per share.

In providing ongoing earnings guidance, there could be differences between ongoing earnings and earnings prepared in accordance with Generally Accepted Accounting Principles (GAAP) for matters such as, but not limited to, divestitures or changes in accounting principles. AEP management is not able to estimate the impact, if any, on GAAP earnings of these items. Therefore, AEP is not able to provide a corresponding GAAP equivalent for earnings guidance.