Southern Company's 13th Successive Div Hike - Analyst Blog

Electric utility firm Southern Company SO has declared a quarterly dividend of 52.50 cents per share, an increase of roughly 3.5% from 50.75 cents paid on Mar 6, 2014. The dividend will likely be paid by Jun 6, 2014, to shareholders of record as of May 5, 2014.

Southern Company − one of the largest electric utility holding companies in the U.S − revealed that the dividend hike represented the 13th consecutive increase. If the revised dividend is maintained for the rest of the year, the annualized dividend payout of the company will stand at $2.10 per share. Based on the closing price of $45.16 as on Apr 21, 2014, the increased dividend affirms a yield of 4.7%.   

Southern Company is expected to report its first-quarter 2014 results on Apr 30, 2014. The Zacks Consensus Estimate for the company's first-quarter is pegged at 54 cents per share.

Headquartered in Atlanta, GA, Southern Company serves both regulated and competitive markets across the southeastern U.S. It is a holding company for four regulated Southern electric utilities that serve about 4.4 million customers – Georgia Power, Alabama Power, Gulf Power, and Mississippi Power.

The company continues to earn returns that are among the highest in the industry, while at the same time maintaining its position as a low-cost provider of electricity with superior customer satisfaction levels.

However, Southern Company's heavy reliance on coal-generated energy supply and lack of meaningful contribution from renewable energy are matters of concern. In the current age of growing emphasis on ‘environment friendly or green' energy, the company may be forced to invest to ensure regulatory compliance, which can adversely impact profitability.

Southern Company currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players in the electric utility space like CPFL Energia SA CPL, Entergy Corporation ETR and NRG Energy Inc NRG. All the stocks sport a Zacks Rank #1 (Strong Buy).