Two of the market's most popular income ETFs compared side-by-side. See which one fits your yield strategy.
What this means: Both AEP and CAT fall intoTier 2: Yield Plus. This suggests they share a similar risk profile and volatility expectation.
| Metric | AEP | CAT |
|---|---|---|
| Total Return (1Y) | 15.45% | 88.60% |
| NAV Change (1Y) | 12.19% | 87.64% |
| Max Drawdown | -20.34% | -58.82% |
| Beta | - | - |
* Returns include dividend reinvestment. Drawdown calculates peak-to-trough decline over trailing 12 months.
AEP (American Electric Power Company) is a conservative dividend growth fund managed by institutional managers. It focuses on generating income through strategic holdings. With significant capital, this fund has been operational since its inception.
Strategy: Focuses on quality dividend-paying companies with strong balance sheets and consistent payout histories.
CAT (Caterpillar Inc) is a conservative dividend growth fund managed by Corporation. It focuses on generating income through strategic holdings. With significant capital, this fund has been operational since its inception.
Strategy: Focuses on quality dividend-paying companies with strong balance sheets and consistent payout histories.
In the head-to-head battle of AEP vs CAT, the choice depends on your specific goal. AEP wins for Immediate Income with a 3.26% yield. However, CAT is the better choice for Long-Term Growth due to superior total return performance.
Which fund is safer for retirement income? We analyze the yield sustainability and structural risk.
The Bottom Line Question: If you invest $100,000 today, how much cash will you actually receive each month? Here's the exact math:
AEP
Annual Yield: 3.26%
$272/mo
($3,260/year)
Frequency: quarterly
CAT
Annual Yield: 0.96%
$80/mo
($959/year)
Frequency: quarterly
Income Gap: AEP generates $2,301/year more than CAT on the same $100k investment.
Over 20 years, that's $46,015 in additional cash flow (before reinvestment).
Context Matters: Higher income doesn't always mean better investment. Review the "Yield Trap" and "Total Return" sections above—you want income that's sustainable, not just headline-grabbing.
Historical data reveals how these funds behave during market stress. CAT has delivered a superior Total Return of 88.60% over the past year.
What is Max Drawdown? Max drawdown measures the largest peak-to-trough decline in portfolio value during a specific period. Unlike NAV change (which only looks at start vs. end), max drawdown captures the worst moment of pain an investor experienced.
Real-World Scenario: $100,000 Investment
AEP (More Resilient)
Max Drawdown: -20.34%
-$20,340
Worst unrealized loss
CAT (More Volatile)
Max Drawdown: -58.82%
-$58,820
Worst unrealized loss
Protection Value: AEP saved investors $38,480 in drawdown severity on a $100k position.
Why This Matters More Than Total Return: During bear markets or corrections, investors with lower max drawdown are:
⚖️ Capital Preservation Winner: AEP demonstrated superior downside protection, making it the better choice for retirees who cannot afford steep temporary losses.
Every investor has a unique risk profile. Use our Portfolio Intelligence tool to see the impact of adding these ETFs to your holdings.