How to buy American Electric shares

American Electric Power Company is a retail enery provider for more than half a million consumers in North America. In this guide, find out everything you need to know before you invest in American Electric stock.
By: Charlie Hancox
Charlie Hancox
Alongside his passion for trading, Charlie has represented Great Britain and won national championships as a water polo player,… read more.
Updated: Sep 13, 2021
Tip: our preferred broker is, eToro: visit & create account

This page contains all the information you need to make an educated investment in American Electric shares. Read on to discover what the company is, what its business model looks like, and what its recent performance as an investment has been.

Compare the best American Electric trading platforms

Below, we have listed the best places to buy American Electric shares online. Simply click on the relevant link in the table to sign up to one of our recommended, low-fee trading platforms. Otherwise, to continue learning about what American Electric has to offer to investors, read on.

1
Min. Deposit
$50
Exclusive promotion
user-score
10
Trade/invest in stocks with just $50
Invest for dividends and get payout on stocks on Ex-Dividend day
Over 11 payment methods, including PayPal
Start Trading
Description:
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, ETF’s, indices and commodities. eToro users can connect with, learn from, and copy or get copied by other users. Buying stocks on eToro is free and you can invest with as little as $50.
Payment Methods
Bank Transfer, Wire Transfer
Full regulations list:
CySEC, FCA
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.
2
Min. Deposit
$1
Exclusive promotion
user-score
9.3
0 Commissions and no deposit minimums
Registered with and regulated by SEC and FINRA
Loss of cash protection
Start Trading
Description:
Financial company driven by technology and offering all-in-one self-directed investment platform that provides excellent user experience.
Payment Methods
Full regulations list:

How to buy American Electric stock, a step-by-step guide

The process of getting shares in American Electric is quick and easy, so don’t worry even if you’re new to stock investing. These are the steps to follow in order to complete your investment:

  1. Choose a broker. You need to use an online brokerage platform. There are many different options to choose from, each with its own unique benefits and drawbacks. The comparison table above can help you select the right broker for you, and you can head to our comprehensive broker reviews if you’re still unsure.
  2. Create an account. Once you’ve selected your broker, simply go to their website and create an account. The steps required for this will vary from platform to platform, but generally you can expect to have to provide your name, email address, phone number, and some form of photo identification.
  3. Deposit funds. Log into your broker account and select the option to deposit funds. Depending on your broker you’ll have a variety of payment options available; most brokers accept bank transfers and debit card payments, but not all accept e-wallets such as PayPal. Select your preferred payment method and deposit the amount of money you wish to invest in American Electric shares.
  4. Place an order for AEP stock. Search for American Electric’s ticker symbol (AEP) and see the current price at which the stock is trading. If you’re happy with the price, enter the amount of shares you wish to own and place your order.
  5. Execute your order. Once you have placed your order, your broker will automatically execute it for you and your American Electric shares will be listed in your account. Congratulations, you’ve just bought shares in American Electric.

What is American Electric? And should I invest?

Incorporated in 1906 and based in Columbus, Ohio, it is an electric public utility holding company that generates, transmits and distributes electricity to retail and wholesale consumers in the United States. The company generates electricity in a wide variety of ways, including coal and lignite, natural gas, nuclear, hydroelectric, solar, and wind.

Given its consumer base of half a million, it is little surprise that AEP’s infrastructure is vast. It has a coal handling terminal with an annual capacity of around 18 million tons, along with 411 barges, 6 towboats, and 3,016 rail cars. With the resources and strategic partners needed to deliver energy at scale to the American public, AEP is one of the key energy players in the Western Hemisphere.

All in all, you should consider investing in American Electric if you buy into the overall value of the company and its potential for expanding its customer base. With a potential expansion of its operations in wind, solar, nuclear and hybrid technology, AEP could be well equipped to grow in the long run. In addition, this large-cap stock pays a dividend of around 3%, meaning that along with the growth of its stock price, American Electric can provide shareholders with consistent and reliable returns.

How has the company performed in recent years?

The company’s share price growth has been gradual but continuous for the last 5 years, and while revenues haven’t soared in recent years, much of this is due to the impact of COVID-19. Still, American Electric Power manages to generate upwards of $8 billion in revenue and $1.5 billion in income per annum – both solid figures that have risen since the start of the pandemic.

As the COVID-19 pandemic draws to a close, investors have been increasingly bullish on utilities as the world resumes normal life and the industrial sector kicks back into gear. This should serve American Electric well, and with an increasing emphasis on environmentally-friendly power, the company could be poised to benefit from any subsidisation or influx of private capital.

While this is far from the most exciting story, American Electric Power is a solid performer that is operated responsibly and sustainably, and its pathway towards growth in an ESG-focussed era seems clear.

Is it a good time to buy American Electric shares now?

This really depends on what kind of investor you are. If you want to hold American Electric stock for the long-term to speculate on its future value, this could be a good move given the company’s strong foothold in the energy sector and its potential to continue growing. If this is the avenue you want to pursue, make sure you carry out due diligence in the form of fundamental analysis to properly inform your investment.

Conversely, if short-term stock trading is more up your street, you will be aiming to flip American Electric shares for expedited returns. In this instance, draw your focus away from the fundamentals and investigate the key technical indicators that can allow you to identify patterns and predict where the market is heading.

Regardless of whether you go for a long-term or short-term strategy, make sure you know exactly what you are doing. One of the key ways of assuring this is by keeping an eye on the latest news and developments concerning AEP and the American energy sector. Check out any of our top news stories below to update the context that surrounds your investment.

Buying, selling and trading American Electric shares for beginners

What to do before buying shares

You should always take the time to research a stock fully before investing your money, especially if you haven’t bought shares before. The more knowledge you have, the better your chances of making a wise investment. 

With that in mind, here’s a checklist to run through before you start.

  1. Research the company. You should always examine the fundamentals of a company first. What is American Electric? How did the company get its start? How did it grow? Does American Electric’s balance sheet look like it’s in a good place? Is the company innovating? The more you know about American Electric, the better positioned you’ll be to make smart investment decisions.
  2. Make sure you understand the basics of stock investing. Before getting involved in the stock market, make sure you have an understanding of how it works. This will ensure that you have more clearly defined goals and have thought through how you will achieve them.
  3. Decide between share dealing and CFD trading. Choose the type of investment strategy you want to pursue, and make sure you have carried out the necessary fundamental or technical analysis for share dealing and CFD trading respectively.
  4. Set the size of your budget. The golden rule of investing is never to risk more than you can afford to lose. Not every investment you make will result in a profit, so it is important to set a budget that not only allows good potential for capital growth, but also protects against overly damaging losses.
  5. Find the right broker. Individual brokers each have their own pros and cons. Some will have low fees but have a user interface you struggle to understand, whereas others may be a bit more expensive but come with a range of features that you want to take advantage of. Our broker reviews can help you find the right platform for you.
  6. Examine broader market conditions. No stock exists in a vacuum, and it’s always important to analyse the general trends of the stock market as a whole before investing. If a bear market is setting in and stock prices are falling, it’s best to wait it out and invest your money later when the stock is cheaper. If, however, the market is looking bullish, you’ll want to make your investment quickly to get the maximum benefit from rising stock prices. Follow the latest news to keep on top of movements in the financial markets.

What is the difference between buying, selling, and trading shares?

If you’re new to stock investing, then it’s important to understand the basics of how to buy, sell, and trade American Electric shares. Here’s a quick run-through of what’s involved in each.

Buying American Electric

This process involves finding a broker and placing an order for American Electric stock, as outlined in the steps further up this page. Ideally, you want to time your investment when the stock’s price is low so that you can profit by selling the shares after they increase in value.

Selling American Electric

When you sell any American Electric shares you have bought, you’ll want to do so at a higher price than the one at which you bought to earn a profit. 

When you sell is up to you. You might decide to hold for a long period of time, hoping to benefit from the company growing steadily throughout. Or, if you see that American Electric’s stock is already up a lot compared to the price you bought it and you’ve noticed that the stock market is starting to fall, it might make sense to sell and take your profits to invest elsewhere. Equally, if the stock has fallen since you bought it and looks set to fall further, it might be a good idea to cut your losses by selling your shares.

Trading American Electric

Trading is the same process, it’s just done over shorter periods of time with the aim to make small profits on a regular basis. This means that you can make money faster and spend your profits in your day-to-day life – however, on the other side it means you can lose money faster as well. For inexperienced investors, we generally recommend making investments for at least 6 months to a year instead of making trades in quick succession.

You can trade American Electric shares through buying and selling shares, or by trading with CFDs. These allow investors to speculate on stock prices and trade with leverage in pursuit of bigger gains. CFDs trading is explained further in the next section, but it is worth noting that beginners should avoid trading with leverage. It comes with large risks and is best left to experienced investors.

Share dealing vs CFD trading

When it comes to investing in any stock, the two options you have are share dealing and trading. Which one of these methods to opt for largely depends on your investment timeline, with investors thinking long term tending to go for share dealing, and those looking for short term gains pursuing a more aggressive trading strategy.

Here’s a quick summary of the two approaches, and the pros and cons of each.

Share dealing 

Share dealing refers to the practice of buying and holding shares in a particular company over the long term. When investing like this, you’re seeking to profit either from dividend payments or an increase in the stock’s price over time.

When investing your money this way, it is important to do a thorough fundamental analysis of the company in which you are investing. You want to put your money in a stock you believe will trend upwards over time, even if there is some market volatility along the way, rather than get distracted by shorter-term peaks and troughs.

Pros

  • Can build wealth over time to achieve financial goals
  • Don’t need to be very reactive to short-term market movements
  • Some stocks will give you an income through regular dividend payments

Cons

  • Takes a long time to realise any profits
  • Your capital is tied up in stocks and cannot be used for other investments

CFD Trading 

If your aim is to generate profits in the short term, then you might be better off trading shares than holding them in your portfolio. Stock trades like this are executed using CFDs (contracts for difference), which allow investors to trade against the value of a stock without having to take ownership of it. When CFD trading, investors are looking to buy and sell stocks fast to profit from short-term fluctuations in value.

One aspect of CFD trading that many investors find attractive is that they allow you to trade with leverage. This means you can place large trades while only putting up a fraction of the value yourself – for instance, if a platform offered leverage of 1:10, you could put £10 into AEP shares and be able to trade £100 worth. This can maximise profits if the market moves in your favour, but be careful as it can also lead to heavy losses.

When trading using CFDs, it is key to be skilled at technical analysis and reading stock price charts. As you’re trading stocks quickly and frequently, the fundamental strength of the company in which you’re investing isn’t as important as being able to predict how its stock price will rise and fall minute-by-minute.

Pros

  • Can generate fast profits if you read the market right 
  • Some platforms allow you to trade with leverage
  • Prevents your capital being tied up so you can take advantage of investment opportunities

Cons

  • Trading with leverage is risky and can lead to big losses
  • Doesn’t necessarily generate growth over the long term

Consider which approach suits you best and craft an investment strategy that works for you. If you need more information, then simply take our course on how to trade stocks.

How to choose a broker

With the wide variety of online brokers available these days, it can be hard to figure out which is the best service to go with. Our comparison table and in-depth reviews can help you cut through the noise, but by and large these are the aspects you should be considering when selecting a broker:

  • Range of stocks available. The most important thing is that you can actually use the broker to find the shares you’re looking for. Some brokers offer more stocks than others, and many will allow you to trade other assets, such as cryptocurrency and commodities.
  • Fees and commissions. You want to keep as large a chunk of your profits as you can, so it’s important to make sure your broker doesn’t charge high fees that can eat into your profits.
  • Regulation. You should only use regulated brokers. Unregulated brokers can be risky and offer little to no protection if the business were to fail while you had funds in your account.
  • Payment methods available. You might want to fund your trading account using a specific payment method, such as PayPal. Not all brokers accept every payment method, but using our comparisons you can search only the brokers that support the option you’re looking for.
  • Reputation. One of the strongest indicators of a broker’s reliability is the reputation it has with the customers who have used it. Brokers are online businesses, and as such many user experiences can be found online. You can check these out in addition to our reviews to make sure you choose the right platform.
  • Customer service. As you’re going to be investing your money using the platform, you want to check that the broker offers good customer service in case you have a query or something goes wrong.

Latest American Electric news

The US consumer prices rose 5% in May, the bureau of labor statistics reported on Thursday. The market expected inflation to increase by 4.7% after increasing 4.2% in April. The upside surprise would typically be positive but not under the current circumstances.  There is concern that inflation could be rising…

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Charlie Hancox
Financial writer
Alongside his passion for trading, Charlie has represented Great Britain and won national championships as a water polo player, and as a budding film director, has… read more.