What Southern Company actually does
Southern Company is a gas and electric utility holding company based in the southeastern United States. It is headquartered in Atlanta, Georgia, and has executive offices in Birmingham, Alabama. Its subsidiaries include Georgia Power, Alabama Power, Mississippi Power and Southern Company Gas, plus a competitive generation business.
How the business makes money
Like other regulated utilities, Southern earns a return on the assets it invests in, as approved by state regulators. Population and business growth in the Southeast support steady demand for electricity.
A large and complex undertaking in recent years was the Vogtle nuclear expansion in Georgia, the first new nuclear units built in the US in decades. It ran over budget and past schedule, but the new units have now entered service, which lets the company focus on recovering costs and returning to steadier growth.
The dividend story
Southern pays a quarterly dividend and has paid dividends for many decades. The yield is typically above the market average and increases tend to be modest.
Utilities rely on debt, so payout ratio, borrowing costs and regulatory approvals all affect how safe a dividend is.
What to keep an eye on
- Debt and interest rates. Both affect profits and share prices.
- Regulatory decisions. They set what the company can earn.
- Project risk. Large construction projects can run over budget.
- Weather and storms. They create costs and outages.
Quick take
Southern Company is a large, regulated utility with a long dividend history and moderate growth. It suits investors who value stability and income.