Electric Utility Pays 16 Years of Dividend Boosts
By: Ned Piplovic,
A utility company, serving primarily 11 states in the U.S. Southeast, rewarded its shareholders with a 4.6% dividend yield and continues its annual dividend boosts, which currently extend 16 consecutive years.
The company’s current dividend yield is significantly higher than the average yield of the company’s competitors in the industry. The long track of annual dividend boosts is accompanied with a modest, but volatile long-term share price growth.
The company’s upcoming ex-dividend, which will be on November 17, 2017, is followed by a December 6, 2017, pay date.
The Southern Company (NYSE:SO)
Founded in 1945 and headquartered in Atlanta, The Southern Company, together with its subsidiaries, engages in the generation, transmission and distribution of electricity. The company also constructs, acquires, owns and manages power generation assets, including renewable energy projects, sells electricity in the wholesale market and distributes natural gas. As of September 2017, the company owned and operated 46,000 MW of generating capacity, which comprises 33 hydroelectric generating stations, 29 fossil fuel generating stations, three nuclear generating stations, 14 combined cycle/cogeneration stations, 33 solar facilities, nine wind facilities, one biomass facility and one landfill gas facility. Additionally, the company’s assets include nearly 200,000 miles of electric transmission and distribution lines, as well as more than 80,000 miles of natural gas pipeline. The company manages 1,500 billion cubic feet of combined natural gas consumption and throughput volume annually. Southern Company’s 11 regulated electric and natural gas distribution companies operate in 19 U.S. states and provide service to approximately 9 million customers with a projected regulated rate base of approximately $50 billion. In addition to its utilities operations, the company also provides digital wireless communications services with various communication options, including push to talk, cellular service, text messaging, wireless internet access and wireless data.
The share price began the current trailing 12 months at $50.72 and quickly dropped to its 52-week low of $46.59 by December 1, 2016, then reversed direction and rose 11% to reach $51.71 by mid-June 2017, which was a new 52-week high at the time. However, following another direction change, the share price relinquished almost all those gains and fell to $46.78 by July 25, 2017, which was just 0.4%, or $0.19, above its 52-week low on December 1, 2016. Since then, the share price has regained all its losses by October 19, 2017. The shares reached a new 52-week high and closed on October 20, 2017, at 52.21. This closing price is 3% higher than it was 12 months ago and 12% above the 52-week low from December 2016.
The current quarterly dividend of $0.58 is 3.6% higher than the $0.56 quarterly dividend from the same period last year. This current dividend converts to a $2.32 annualized dividend payout and a 4.5% dividend yield. Its yield is more than 90% above the simple average yield of the Utilities sector, as well as 91% higher than the average yield of all the companies in the Electric utilities segment.
The Southern Company has been paying dividends since 1946 and has rewarded investors with annual dividend boosts for the past 16 consecutive years. Over that period, the company grew its annual dividend payout at an average rate of 3.5% per year. The result of these consecutive boosts is a 73% enhancement of the total annual dividend amount since 2001.
The company announced on October 20, 2017, that one of its subsidiaries – PowerSecure – has been awarded a contract by the U.S. Army Corps of Engineers (USACE) to provide support in repairing the power grid in Puerto Rico, which was damaged during hurricanes Irma and Maria. This contract should help generate additional revenue and support potential share price growth and total returns in the short term.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.