American Electric Power is one of the largest regulated utilities in the United States, providing electricity generation, transmission, and distribution to more than 5 million customers in 11 states. About 39% of AEP's capacity is coal, with the remainder from a mix of natural gas (28%), renewable energy and hydro (23%), nuclear (7%), and demand response (3%). Vertically integrated utilities, transmission and distribution, and generation and marketing support earnings.

American Electric Power is one of the largest electric companies in the U.S. AEP is 95% regulated with generation, transmission, and distribution operations and relatively small gas operations. The company's eight vertically integrated utilities and distribution utilities deliver electricity to more than 5.6 million customers in 11 states in the Midwest and Southeast. AEP has about 31 GW of generating capacity and 252,000 distribution lines. AEP also owns the nation's largest electricity transmission system, with 40,000 system miles. The company had been under strategic review of its energy business, which ended in 2024 with AEP also announcing new leadership. AEP also exited the competitive generating business in 2023, but still has wholesale electricity operations. AEP has one nuclear generating plant, and its owned generation mix is about 38% coal, 8% nuclear, 26% natural gas, and 9% renewables. While still heavily reliant on coal, the company is expanding its use of renewable energy with investments in wind generation. Its current renewable generation capacity is 6,000 MW and the company plans to have renewables and storage providing 50% of its capacity by 2033. Revenues in 2025 were $21.9 billion, with vertical utilities accounting for about 58%. The company's largest vertical utility subsidiary based on revenues is Appalachian Power, which reported $4.2 billion in 2025. AEP has a record of consistent dividend growth and a market cap of about $66.7 billion.

The major indices are higher at midday. Private jobs data from this morning was weaker than expected, and possibly removes some pressure for interest rates to be raised. Now Wall Street awaits the August nonfarm payrolls report on Friday, another check on the labor market. Oil prices are climbing again, with crude oil at $90 per barrel. The yield on the 10-year note is at 4.80%.

For the past decade-plus, the performance record has favored growth stocks over value. Yet the tide may be changing. In 2025, value stocks and growth stocks had similar returns, with growth advancing 13.8% and value returning 13.6%. More than halfway through 2026, value stocks have climbed 16.8% while growth stocks have returned 5.7%. The post COVID-19 economy gave a lift to some of the cyclical companies (energy and regional banks), and value stocks outpaced growth stocks that year. While growth stocks led for a few years after that, history has shown other instances where value stocks have outperformed. Value stocks tend to be more resilient in times of market uncertainty and higher volatility as they are less likely to overreact to economic news. Another factor, in our view, has been the level of interest rates. If interest rates are high, discount rates will be high, and future profits will be worth less, creating an unfavorable environment for growth stocks. In any event, the value sector is the place to achieve income.