Despite a premium dividend yield, Southern Company (SO) lagged its peers in terms of total returns. In 2018, Southern Company returned -3%, while broader utilities (XLU) returned ~4%. Total returns consider the capital appreciation and dividends paid during a specific period.
In the last five years, Southern Company returned 35%, while utilities at large returned 65%. Southern Company’s yield has been higher than peers’ average in the last five years. Due to Southern Company’s volatile market performance following poor earnings growth and power plant issues, the company underperformed its peers in the last five years.
Duke Energy (DUK), the second-largest utility by market cap, returned 7% in 2018. In the last five years, Duke Energy’s returns were ~54%.
Utilities are termed as a “boring” sector due to slow stock price movements. However, utilities outperformed broader markets in the last five years. Utilities’ total returns were ~65%, while the S&P 500 returned 48% in the last five years.