Evaluating The 6.3% Bond Yield Of Southern Company

Aristofanis Papadatos
8.7K Followers
(12min)

Summary

  • Southern Company's new 60-year bond offers a 6.3% yield, nearly double the stock's 3.4% dividend, appealing to income-focused investors.
  • Southern's defensive, regulated utility business and strong financial history make its bond default risk negligible, providing a wide margin of safety.
  • Interest rate trends are the main risk; if rates fall, bondholders benefit from both yield and potential price appreciation.
  • For income investors, the bond's high yield is attractive, while the stock remains better suited for those seeking dividend growth and capital appreciation.
Business on Wall Street in Manhattan

Pgiam/iStock via Getty Images

Many income-oriented investors have a stake in the common stock of Southern Company (NYSE:SO) for its reliable dividend. The utility has not cut its dividend for 79 consecutive years, it has raised its dividend for 24 consecutive years

This article was written by

8.7K Followers
I am a chemical engineer with a MS in Food Technology and Economics, and a MENSA member. I am the author of the book "Investing in Stocks and Bonds: The Early Retirement Project" (2024):I am also the author of the book "Mental Math: How to perform math calculations in your mind".I am also the author of 2 other mathematics books ("Arithmetic calculations without a calculator" and "Word Problems") and perform almost all the calculations in my mind, without a calculator, making it easier to make immediate investing decisions among many alternatives. I invest applying fundamental and technical analysis and mainly use options as a tool for both investing and trading. I achieved my goal of financial independence at the age of 45. In my spare time, I follow Warren Buffett's principle: "Some men read playboy. I read financial statements".

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About SOJF Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on SOJF

Related Stocks

SymbolLast Price% Chg
SO
--
SOJF
--