Analyzing This Utility Stock After its Latest Dividend News

AES attracted investor attention with an increased dividend payment last week

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AES Corporation (NYSE:AES) is a global energy company that generates and distributes electrical power. AES is one of the world's largest power companies, generating and distributing electric power in 15 different countries and employing more than 10,000 people all across the world.

On Dec. 7, the Board of Directors of AES announced an increase of 5% in the company's quarterly dividend for AES shareholders, from $0.1433 per share to $0.1505 per share This increase will go effect beginning in the first quarter of 2021. AES has a forward dividend of $0.60 and a dividend yield of 2.85%. AES stock has regularly paid a quarterly dividend since 2012 and has nearly quadrupled its dividend since its initial payment of $0.04.

On the charts in the last month, AES has been able to distance itself from its year-to-date breakeven level. This culminated in a Nov. 9 13-year high of $22.32, with shares' ascending 30-day moving average cleanly catching pullbacks since June. 

AES Stock Chart

The energy stock also has an impressive forward price-earnings ratio of 13.66 and continues to grow its dividend at a pretty fast rate. However, that ends the fundamentals-focused list of positive attributes.

AES has simply not fared to well over the past few years from a fundamental point of view. The company’s revenue have been in a constant state of decline, ultimately dropping its revenue from $13.6 billion in 2016 all the way down to $9.5 billion in the past twelve months. In addition, AES’s balance sheet is of major concern for potential investors. AES has massive $21.35 billion in total debt paired with just $1.89 billion in cash.

However, regardless of if the fundamentals align for long-term investors, there is always an options strategy to use. Now looks like an opportune time to get in on AES' next move with options. The equity’s Schaeffer’s Volatility Index (SVI) of 32% stands in the low ninth percentile of its annual range. This means options players are pricing in relatively low volatility expectations at the moment.

Plus, AES currently ranks high on the Schaeffer's Volatility Scorecard (SVS), with a score of 89out of 100. This scorecard is used to identify which underlying stock options have historically had underpriced or overpriced options. High SVS readings indicate consistently realized greater volatility than its options have priced in -- pointing to AES being a potential premium-buying candidate, rather than a premium-selling candidate.


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