Southern Comfort For Income Investors

Aug. 6.14 | About: Southern Company (SO)


Recent share price pullback pushes yield to nearly 5%.

Geographic tailwinds and earnings stability comforting to income investors.

History of dividend increases likely to continue.

Shares in the Southern Company (NYSE:SO) have recently pulled back to the lower half of their fifty-two week range. The decline in share value has pushed the dividend yield to nearly 5% and we like the shares for this well positioned utility - particularly for income investors seeking high yields and stability.

SO Chart

SO data by YCharts


SO and subsidiaries operate as a public electric utility company. The company engages in the generation, transmission, and distribution of electricity primarily in southeastern United States.

Geographic Tailwind and Earnings Stability.

The Southern Company benefits from geographic tailwinds servicing rapidly growing southeastern states. SO generates more than 90% of its earnings from regulated subsidiaries providing significant stability to earnings. SO's profile allows makes debt investors happy as well, noting the company is able to borrow for longer periods of time and at lower interest rates than other utility companies.

Click to enlarge

Click to enlarge

Click to enlarge

History of Dividends

SO Management is focused distributions to shareholders. Dividends have been paid for more than 65 years and rapidly increasing over the last twelve years and the company projecting 7 cent increase in future years.

Click to enlarge

Overall SO is an attractively valued utility boasting an atypical 5% dividend. Operating in an attractive geographic segment with earnings stability and dividend stability income seeking investors would be wise to add SO to their portfolio.

Disclosure: The author is long SO. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.