Is Southern Company Stock a Buy?
The Southern Company (NYSE: SO) is one of the largest utilities in the United States. It currently offers investors a yield of roughly 4.6%, toward the high end in the utility sector. However, it has significantly underperformed both the S&P 500 and the Utilities Select Sector ETF (NYSEMKT: XLU) on a total return basis in large part because of a huge albatross around its neck: Developing the Vogtle nuclear plant. What's going on there, and is this enough of a risk that investors should look elsewhere? Here's what you need to understand before deciding if Southern Company is a buy or not.
When you step back and look at The Southern Company, it is, at its core, a pretty simple utility company. It owns a collection of regulated electric and natural gas utilities, with a modest investment in fee-based businesses like contracted renewable power assets. In fact, it has increased its dividend or held it steady for an incredible 72 consecutive years. If you do the math on that, the company has been reliably returning cash to investors since 1948.
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