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Why Southern Company is a great stock to own

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Consistent returns to shareholders

Southern Company (SO) has provided handsome returns to its shareholders throughout its history. The following are total shareholder returns for Southern Company investors for the past three decades:

  • Last 10 years – annualized returns of 8.1%
  • Last 20 years – annualized returns of 11.2%
  • Last 30 years – annualized returns of 14.1%

Total shareholder returns include share price appreciation and dividends received by investors.

Stock_Perform

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Comparison with broader market and utility ETF

As noted in the above chart, Southern Company (SO) has outperformed the Utilities Select Sector Standard & Poors depositary receipt (or SPDR) (XLU) over the last six years. The fund is a key exchange-traded fund (or ETF) in the power utility sector. Since 2008, Southern Company has appreciated 20.5%, while the Utilities Select Sector SPDR (XLU) gained 6.1% in the same period.

However, Southern Company’s returns have been relatively less than the Dow Jones Industrial Average (or DJIA). Since the beginning of 2008, the DJIA has gained 37.8% until mid-November 2014.

Returns for 2014

The returns for utilities in 2014 have been stronger than the broader markets. As of November 14, 2014, the year-to-date returns of the Utilities Select Sector SPDR (XLU) was 18.8%, while the DJIA’s was 7.0%.

Although Southern Company’s returns have been lower than the Utilities Select Sector SPDR (XLU), Southern Company has generated higher returns than DJIA. The year-to-date returns for Southern Company are 14.2%.

Edison International (EIX), Exelon Corporation (EXC), and Entergy Corp. (ETR) have generated the highest returns in the power industry so far in 2014.

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