Free cash flow
Free cash flows of US utilities (XLU) have been stretched thin in the last few years due to increased capital expenditures and falling operating cash flows. Southern Company (SO) has not generated positive free cash flow in the last five years. In the first half of 2017, the Georgia-based utility’s free cash flows came in at -$1.8 billion.
Free cash flow is a measure of the difference between a company’s cash flow that it generates from operations and its capital expenditures. Companies use free cash flow to pay dividends, expansions, and acquisitions.
In comparison, NextEra Energy (NEE) has generated positive free cash flows since 2014. You can read more about NextEra Energy’s free cash flows in How NextEra Energy’s Free Cash Flows Compare to Peers.
Duke Energy (DUK) has also been generating negative free cash flows over the last five years.