Analyzing Southern Company’s Attractive Dividend Profile
Southern Company’s dividend profile
At $50 billion, Southern Company (SO) is a leading utility with a strong dividend profile. It has paid increasing dividends for 15 consecutive years. Also, it’s one of the highest yielding utilities in the sector. With a dividend yield of 4.4%, it’s much higher than utilities’ (XLU) yield of 3.5%. In comparison, top utilities Duke Energy (DUK) and NextEra Energy (NEE) yield 4.2% and 3%, respectively.
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Expected dividend growth
Southern Company’s management expects an $0.08 rise in its 2017 annual dividends, which would represent a rise of 3.5% over its dividends last year.
Although Southern Company’s yield is one of the highest, its dividend growth rate was mostly on the lower side of the industry average. In the past five years, the company increased its dividends 3.6% compounded annually.
Southern Company’s regulated operations would explain its stable yield, although its relatively lower dividend growth rate might limit appreciation in its stock price.
Southern Company’s peer NextEra Energy (NEE) raised its dividends ~10% during the same period. Dominion Resources’ (D) dividend growth rate in the last five years stayed above 7%.
Read Which Utility Will Pay Higher Dividends in 2017? to learn more.