Head-To-Head Contrast: AES (NYSE:AES) versus CenterPoint Energy (NYSE:CNP)

AES (NYSE:AES) and CenterPoint Energy (NYSE:CNP) are both large-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Dividends

AES pays an annual dividend of $0.70 per share and has a dividend yield of 4.8%. CenterPoint Energy pays an annual dividend of $0.92 per share and has a dividend yield of 2.2%. AES pays out 37.4% of its earnings in the form of a dividend. CenterPoint Energy pays out 56.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AES has increased its dividend for 12 consecutive years and CenterPoint Energy has increased its dividend for 5 consecutive years. AES is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

AES has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.46, meaning that its stock price is 54% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for AES and CenterPoint Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AES	0	8	1	0	2.11
CenterPoint Energy	1	6	8	0	2.47

AES currently has a consensus target price of $15.63, suggesting a potential upside of 6.40%. CenterPoint Energy has a consensus target price of $44.62, suggesting a potential upside of 4.47%. Given AES’s higher probable upside, equities analysts clearly believe AES is more favorable than CenterPoint Energy.

Institutional and Insider Ownership

93.1% of AES shares are held by institutional investors. Comparatively, 91.8% of CenterPoint Energy shares are held by institutional investors. 0.8% of AES shares are held by company insiders. Comparatively, 0.2% of CenterPoint Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares AES and CenterPoint Energy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AES	$12.23 billion	0.86	$910.00 million	$1.87	7.85
CenterPoint Energy	$9.36 billion	2.99	$1.05 billion	$1.63	26.20

CenterPoint Energy has lower revenue, but higher earnings than AES. AES is trading at a lower price-to-earnings ratio than CenterPoint Energy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AES and CenterPoint Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AES	10.78%	22.66%	3.84%
CenterPoint Energy	11.38%	10.56%	2.57%

Summary

AES beats CenterPoint Energy on 11 of the 17 factors compared between the two stocks.

About AES

The AES Corporation, together with its subsidiaries, operates as a diversified power generation and utility company in the United States and internationally. The company owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries; owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market. It uses various fuels and technologies to generate electricity, such as coal, gas, hydro, wind, solar, and biomass, as well as renewables comprising energy storage and landfill gas. The company owns and/or operates a generation portfolio of approximately 34,596 megawatts and distributes power to 2.6 million customers. The company was formerly known as Applied Energy Services, Inc. and changed its name to The AES Corporation in April 2000. The AES Corporation was incorporated in 1981 and is headquartered in Arlington, Virginia.

About CenterPoint Energy

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company operates through two segments, Electric and Natural Gas. The Electric segment includes electric transmission and distribution services to electric customers and electric generation assets, as well as optimizes assets in the wholesale power market. The Natural Gas segment engages in the intrastate natural gas sales, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio, and Texas; permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies; and provides maintenance and repair services of home appliances to customers in Minnesota and home repair protection plans to natural gas customers in Indiana, Mississippi, Ohio, and Texas through a third party. It serves approximately 2,534,730 metered customers; owned 348 substations with transformer capacity of 79,719 megavolt amperes; and owned and operated 217 miles of intrastate pipeline in Louisiana and Texas. The company was founded in 1866 and is headquartered in Houston, Texas.