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Southern Company (SO) Announces Dividend Hike, Shares Up

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Electric utility firm The Southern Company (SO - Free Report) recently delivered pleasant news to investors. The company announced a 8-cent hike in annual dividend to $2.32 per share. Notably, this marks the 16th straight year that the company has increased its annual payout. The quarterly dividend of the company will increase by 2 cents from 56 cents to 58 cents, representing a 3.6% hike. This marks the 278th consecutive quarter of equal or higher dividend payment by the company. The dividend will be payable on Jun 6 to stockholders of record as on May 15. Post the announcement, the share price of Southern Company increased 0.73% to $49.78 on Apr 17.

Utility stocks are very popular among investors since these companies manage to generate consistent profits and reward shareholders with high dividends and Southern Company is no exception. The company has been a windows-and-orphan stock with a long history of regular reliable dividends and strong portfolio of state-regulated electric and gas utilities. The company boasts of a regular distribution record since 1948 and it has also managed to improve upon its payout for 16 consecutive years. The annual yield on the dividend is 4.7%.

Zacks Rank & Key Picks

Southern Company is one of the largest and best-managed electric utility holding companies in the U.S. The firm dominates the power business across the southeastern region. The company holds an exceptional dividend record and investors can be assured that the company will hold on to its commitment to continue this streak.

The company’s shares rallied almost 11% over the last two years, outperforming the Zacks categorized Utility- Electric Power industry gain of around 2%.  

However, the company’s high leverage is a matter of concern. The company carries a highly leveraged balance sheet with a net debt of $78.1 billion. The high debt level will require significant cash flows for repayments.

Therefore, Southern Company currently carries a Zacks Rank #3 (Hold).

Better-ranked players from the same industry include Pampa Energia S.A. (PAM - Free Report) , RWE Aktiengesellschaft (RWEOY - Free Report) and TransAlta Corporation (TAC - Free Report) . All the three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pampa Energia is expected to report year-over-year growth of 38,200% in its earnings in 2017.

RWE is expected to report year-over-year growth of 16.19% in its earnings in 2017.

TransAlta is expected to report year-over-year growth of 55.56% in its earnings in 2017.

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