Dividend Growth Stock Overview: Southern Company

Southern Company supplies energy to Florida, Mississippi, Alabama and Georgia.
Photo: Freeimages.com/Mya Leigh

About Southern Company

Southern Company is a holding company that has full ownership in electricity providers serving 4.5 million customers in the southeastern United States. The company owns all the common stock in Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Southern Power, and serves nearly all of Alabama and Georgia, and northwest Florida and southeastern Mississippi. The company’s heritage dates back over a century, to the formation of the Alabama Power Company in 1906.

In addition to the electrical power companies noted above, Southern Company also owns Southern Nuclear, which services the company’s nuclear power plants, and SouthernLINC Wireless, which markets digital wireless services to the public and supplies wholesale wireless capacity to telecommunications companies in the southeastern United States. Roughly 86% of Southern Company’s revenues come from electricity sales to retail customers, 10% from wholesale electricity sales to other power companies, and the remaining 4% from other activities (e.g., wireless capacity and services).

Southern Company has a share repurchase program, but it is only used to compensate for the additional shares issues as part of the company’s employee stock and option plans.

The company is a member of the S&P 500 index and trades under the ticker symbol SO.

Southern Company’s Dividend and Stock Split History

Southern Company Dividend History

Southern Company has consistently grown its dividend since 2002.

Southern Company has paid dividends since at least 1979 and grown them since 2002. The company announces its annual dividend increase in mid-April, with the stock going ex-dividend in mid-May. The company’s most recent dividend increase was in April 2015, when Southern Company increased its payout by 3.4% to an annualized $2.17.

Southern Company has a record of modest, but very consistent dividend growth. The company has increased its dividend in the low single-digit percentages, usually between 3 – 4.5% a year. Over the last 5 and 10 years, Southern Company average annual dividend growth rates are 3.61% and 3.85%. Since 2001, the average dividend growth rate has been 3.44%.

In its history, Southern Company has split its stock twice. Both splits, which were in January 1966 and February 1994, were 2-for-1.

Over the 5 years ending on December 31, 2015, Southern Company stock appreciated at an annualized rate of 8.93%, from a split-adjusted $30.17 to $46.24. This underperformed the 10.20% compounded return of the S&P 500 index over the same period.

Southern Company’s Direct Purchase and Dividend Reinvestment Plans

Southern Company has both direct purchase and dividend reinvestment plans. You do not need to be a current shareholder to participate in the plans. If you don’t currently own stock in the company, you can enroll with a minimum initial investment of $250. Once enrolled, you can purchase additional shares with a minimum investment of $25. The dividend reinvestment plan allows for full and partial dividend reinvestment.

The plans’ fees are average as compared to other companies’ plans. When you enroll, you’ll pay an initial enrollment fee of $10. When buying stock, you’ll pay a fee of $5 on purchases by check and $2.50 on purchases by automatic debit, plus a commission of 5 cents per share. The 5-cent commission does not apply to dividend reinvestments. When you sell your shares, you’ll pay a transaction fee of $15 or $25 (depending on the type of sell order you place) plus a commission of 12 cents per share.

Helpful Links

Southern Company’s Investor Relations Website

Current quote and financial summary for Southern Company (finviz.com)

Information on the direct purchase and dividend reinvestment plans for Southern Company

 

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