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4 Utility Stocks That Every Retiree Should Own

Let's face it, retirees have different investment needs than investors in their 20s or 30s. Retirees require a mix of current income, income growth that at the least stays ahead of inflation, and safety. The utilities sector matches up well with retiree investing needs. But retirees shouldn't purchase just any utility stock, because some are better than others.

Let's look at four utility stocks every retiree should own. One of them is a member of the exclusive Dividend Aristocrats List, which consists of stocks with 25 or more years of consecutive dividend increases.

The other three stocks in this article also have high yields, score high marks for safety and should provide at least inflation-beating income growth going forward. In fact, two of the four make the cut for our 10 best dividend stocks for retirees.

Utilities such as American Electric Power offer sustainable dividends because of their highly stable business models and earnings. Electricity is a basic need for society to function and is essentially a matter of national defense. That places a great deal of stability underneath utility stocks. Consumers need to keep the lights on, even when the economy enters a downturn. That means utility profits are highly stable from year to year, even during recession. Plus, regulated utilities are allowed to pass through modest rate increases each year. Along with population growth, this keeps revenue and earnings growth intact for utility companies such as American Electric.

American Electric Power is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells AEP? Learn more now.

American Electric in 2015 increased net income by 25% and earnings per share by 11%. Over the long term, management expects to grow operating earnings at a 4%-6% annual rate, but considering the company's strategic investments, this forecast could be too conservative.

Going forward, American Electric could see compelling future growth due to its embracing of renewable sources of energy. American Electric Power holds an impressive portfolio of renewable energy assets. It has had an active wind development program since the mid-1990s. Its six regulated utility operating companies have agreements to purchase nearly 2,000 megawatts from wind power facilities across seven states. In addition, American Electric Power has significant hydroelectric and solar assets. The company has 17 hydroelectric facilities in Virginia, West Virginia, Ohio, Indiana and Michigan, which together generate more than 800 megawatts of electricity. In 2013, American Electric Power's Ohio division signed a 20-year power purchase agreement for solar energy.

American Electric is already an above-average dividend growth stock within the utility sector. It raised its dividend by...


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