16 Apr

Southern Company: Analyzing Its Dividends

WRITTEN BY Vineet Kulkarni

Southern Company’s dividend

Southern Company (SO) declared a quarterly dividend of $0.62 per share, which implies an annualized dividend of $2.48 per share. The dividend increased 3.3% compared to its dividend last year. Southern Company’s dividend increased for the 18th consecutive year.

Southern Company’s quarterly dividends will be paid to shareholders on record as of May 20. The dividends will be paid on June 6.

Southern Company: Analyzing Its Dividends

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Dividend yield

Southern Company is trading at a dividend yield of 4.7%, which is notably higher than broader utilities’ average yield close to 3.2%. Southern Company has one of the longest dividend payment histories among its peers. Duke Energy (DUK) is trading at a dividend yield of 4.1%, while PPL (PPL) offers a yield of 5.2%.

Although Southern Company offers a premium yield, the company lags its peers in terms of dividend growth. Southern Company’s dividends per share rose ~3.0% compounded annually in the last five years.

Southern Company’s premium yield indicates a spread of ~200 basis points to the ten-year Treasury yields and ~300 basis points to broader markets.

On average, utilities (XLU) increased their dividends per share ~4% during the same period. Duke Energy increased its dividends 3%, while PPL’s dividend growth rate was more than 2% in the last five years.

Southern Company has paid a cash dividend for 285 consecutive quarters. The utility generates most of its earnings from regulated operations, which facilitates stable earnings and stable dividends. The dividend stability is underlined by Southern Company’s long payment history.

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