The AES Corporation - Potential 'Power'

King?
Apr. 18, 2018 10:16 AM ET
|
About: The AES Corporation (AES)

Lisa Marie
Long/short equity, value, Growth, growth at reasonable price
(64 followers)
Summary

AES is a Fortune 200 company and a global leader in its industry.

Since 2012, AES has been under new management, expanded in countries where it could make a
potential profit and exited the high-risk ones.

AES has recently completed its acquisition with sPower and announced its new joint venture
with Fluence.

AES has been paying a dividend since 2012 and has been increasing the payout annually since
2014.

The AES Corporation (NYSE:AES) is responsible for providing affordable, sustainable energy
to 15 countries through their diverse portfolio of distribution businesses, as well as thermal and
renewable generation facilities. Today, it is known as a global energy industry leader in
innovation and operational excellence, with generation and distribution businesses across four
continents.

However, even though the company shows great numbers and growth, it still isn't favorite among
investors. Could this be because of the Enron scandal or perhaps the poor management it had in
the past? Or could this be the recent scare of tax reform or perhaps the terrible effect of the
hurricanes in 2017? Regardless of the reasoning, AES seems to be making a pretty steady
comeback with a great paying dividend as well. It might be time to put this company back into
the conversation.
Source: AES.com

The AES Corporation History

AES (Applied Energy Services) was founded in 1981 by Roger Sant and Dennis Bakke who met
in the Nixon/Ford Administration as appointees in the Federal Energy Administration.In 1985,
AES built its first power plant in Texas and rapidly took a position as one of the prominent
competitive power plants in the United States. AES became the largest Independent Power
Producer (IPP) in the U.S., having three plants in operation (Placerita, Beaver Valley and
Deepwater) in 1988.The company was actually originally a consulting firm; it became AES
Corporation, which went public in 1991.

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Dividend Ideas | Utilities
The AES Corporation - Potential 'Power'
King?
Apr. 18, 2018 10:16 AM ET
|
About: The AES Corporation (AES)

Lisa Marie
Long/short equity, value, Growth, growth at reasonable price
(64 followers)

As international markets opened up, the company began producing electricity in the UK, which
they then expanded to Argentina, Pakistan, China, Hungary and Brazil. With Dennis Bakke as
CEO, in 1998 AES acquired a minority stake in a power plant in the first generation privatization
in India. In West Africa and Central America, they brought electricity to locales that never had
reliable power, and at the same time served urban centers such as São Paulo, Brazil and
Indianapolis, Ind. After the Enron scandal in 2002, banks were unwilling to loan out more money
to the growing company, and AES suffered a liquidity crisis. At that time, Bakke decided to
resign and Paul Hanrahan was appointed president and CEO.

AES data by YCharts

Under Hanrahan's leadership, the company helped pioneer new pollution control technologies
and biomass conversions in Qatar, Oman, Sri Lanka, Cameroon and Bulgaria. AES also brought
renewable sources of energy to market through the acquisition and development of AES Wind
Generation in the U.S. and Europe, and through AES Solar Energy LLC, its joint venture with
Riverstone Holdings. Hanrahan served for 10 years as AES began to stabilize. Today, Andrés
Gluski is at the helm. If you would like to further research the history of The AES Corporation,
please click here and here.

Current Business

Source: AES.com

Since 2011, when Gluski took over, major reorganization and cost savings programs have
transformed the company, resulting in over $250M in annual savings to date with an additional
$150M in annual savings targeted by 2020. The CEO also initiated an asset sales program that
has generated about $4B in proceeds and simplified the company's operating structure by exiting
from many high-risk countries. AES has paid down approximately one-third, or $2.1B, of its
parent company debt and initiated a quarterly dividend.

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Dividend Ideas | Utilities

The AES Corporation - Potential 'Power'

King?
Apr. 18, 2018 10:16 AM ET
|
About: The AES Corporation (AES)

Lisa Marie
Long/short equity, value, Growth, growth at reasonable price
(64 followers)

The company has also recently completed the acquisition of sPower, who happens to be the
largest independent solar developer in the U.S. In addition, AES announced a new joint venture
with Siemens, Fluence, which is expected to bring together AES' world leading deployment of
battery-based energy storage and grid stability with 208 MW in operation and 268 MW under
construction, contracted or in advanced stage development with Siemens' global scale.
According to the AES website, their current strategic priorities are to:

 Operate our portfolio of generation and utility businesses to create value for our
stakeholders.
 Drive our operating businesses to generate capital for deployment into growth
investments, debt repayment and shareholder dividends.
 Focus growth investments on platform expansions in markets where we have a
competitive advantage and exit markets where we do not.
 Enhance the stability of cash flow and earnings from our businesses through
contractual, regulatory and hedging activities.

A fun fact regarding Andrés Gluski is that he sits on the board for Waste Management (WM),
which is also a great company. To read an article about that stock, click here.

AES Financial and Stock Information

Presently, AES is a Fortune 200 company and global leader in their industry. As stated above,
they have implemented many new business plans including lowering their debt as well as
limiting their exposure to risky markets. Here is a nice summary of the 2017 Annual Report:
It's no secret that AES's stock hasn't had a very good run since 2002 when the Enron scandal
came to the surface. Banks refused to loan AES any more money, which forced them to deal
with their liquidity issues. Since then, AES has changed management twice, and since 2012 they
have shown improvement. As you can see from the chart below, the company has been paying a
quarterly dividend since 2012 and in 2014 there has been a consistent annual increase in payout.
Today and as of January 2018, AES is paying $0.13, which is a yield of roughly 4.49%.

Dividend History

U.S. Internal Revenue Code §6045B Tax Reporting

Ex-Dividend Record Declared Payable Amount Type
October 28, November 1, November 15, Regular
October 13, 2017 $0.12
2017 2017 2017 Cash
Regular
August 1, 2017 August 3, 2017 July 17, 2017 August 17, 2017 $0.12
Cash
Regular
April 27, 2017 May 1, 2017 April 13, 2017 May 15, 2017 $0.12
Cash
January 30, December 15, Regular
February 1, 2017 February 15, 2017 $0.12
2017 2016 Cash
October 28, November 1, November 15, Regular
October 14, 2016 $.11
2016 2016 2016 Cash
Regular
July 28, 2016 August 1, 2016 July 18, 2016 August 15, 2016 $.11
Cash
Regular
Apr 29, 2016 May 2, 2016 Apr 15, 2016 May 16, 2016 $.11
Cash
Regular
Jan 29, 2016 Feb 2, 2016 Jan 14, 2016 Feb 16, 2016 $.11
Cash
October 29, November 2, November 16, Regular
October 16, 2015 $.10
2015 2015 2015 Cash
Regular
July 30, 2015 August 3, 2015 July 17, 2015 August 17, 2015 $.10
Cash
Regular
Apr 29, 2015 May 5, 2015 Apr 24, 2015 May 15, 2015 $.10
Cash
Regular
Jan 30, 2015 Feb 3, 2015 Jan 16, 2015 Feb 17, 2015 $.10
Cash
Regular
Oct 30, 2014 Nov 3, 2014 Oct 15, 2014 Nov 17, 2014 $.05
Cash
Regular
Jul 30, 2014 Aug 1, 2014 Jul 15, 2014 Aug 15, 2014 $.05
Cash
Regular
Apr 29, 2014 May 1, 2014 Apr 18, 2014 May 14, 2014 $.05
Cash
Regular
Ian 30, 2014 Feb 3, 2014 Ian 15, 2014 Feb 18, 2014 $.05
Cash
Regular
Oct 30, 2013 Nov 1, 2013 Oct 15, 2013 Nov 15, 2013 $.04
Cash
Regular
Jul 30, 2013 Aug 1, 2013 Jul 15, 2013 Aug 15, 2013 $.04
Cash
Regular
Apr 29, 2013 May 1, 2013 Apr 19, 2013 May 15, 2013 $.04
Cash
Regular
Ian 30, 2013 Feb 1, 2013 Ian 15, 2013 Feb 15, 2013 $.04
Cash
Oct 26, 2012 Oct 30, 2012 Oct 15, 2012 Nov 15, 2012 $.04 Regular
 Cash

Closing Thoughts

While AES is still in the early stages of rebuilding and innovating, which will mean slow long-
term growth, I do like the idea of enjoying the dividend long term. With this being a necessary
source for most people even in an economic down turn, AES stock could make a defensive add
to your portfolio, too. As always, I suggest doing your own research, or perhaps talking with a
professional, before making any investments.