Yesterday, I added to my position in SO. The share price has been trading roughly 7% below my cost basis and is now yielding > 5% with sound metrics to back it up. Of course, it is widely understood that it is speculation concerning interest rates that has weighed heavily on the stock price and thus forcing the yield higher to compete with what Wall St. is expecting to be higher bond yields in the not too distant future. I comfortable moving against the grain. Here the details of the purchase:
Purchased: 9 shares x $44.00 = $396.00 (+$0 commission)
Dividend Income: $20.88 ($2.32/sh annually; paid quarterly in Mar, Jun, Sep, and Dec)
P/E ratio: 81.45 (vs. S&P @ 22.9)
Debt to capital < 50%: No, 54.7%
Interest coverage ratio of at least 3:1: Yes, 3.6x
S&P and/or Moody's credit rating of BBB+/Baa1 or better: Yes, BBB+
Current dividend yield > 1.5x S&P yield: Yes, 5.27% vs. S&P @ 1.9%
Payout ratio < 60% (or <85% for utilities): No, 438% (however, with est. EPS of $2.99 - the payout ratio would be in line at 77.6%)
Comments: Morningstar.com lists the Forward P/E at 14.7 and current Price/Cash Flow at 7.5. Reasonable EPS growth expectations over the next several years is estimated at 5%. According to David Fish's U.S. Dividend Champion Listing found here, The Southern Company (SO) is listed as a dividend CHAMPION with 17 straight years of dividend increases.
Company Profile
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 in seven states, as well as provides gas marketing services, wholesale gas services, and gas midstream operations. It owns/operates 33 hydroelectric generating stations, 29 fossil fuel generating stations, 3 nuclear generating stations, 14 combined cycle/cogeneration stations, 33 solar facilities, 9 wind facilities, 1 biomass facility, and 1 landfill gas facility. As of February 22, 2017, it had 44,000 megawatts of generating capacity and 1,500 billion cubic feet of combined natural gas consumption and throughput volume serving 9 million electric and gas utility customers. 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 Southern Company was founded in 1945 and is headquartered in Atlanta, Georgia.
Purchased: 9 shares x $44.00 = $396.00 (+$0 commission)
Dividend Income: $20.88 ($2.32/sh annually; paid quarterly in Mar, Jun, Sep, and Dec)
P/E ratio: 81.45 (vs. S&P @ 22.9)
Debt to capital < 50%: No, 54.7%
Interest coverage ratio of at least 3:1: Yes, 3.6x
S&P and/or Moody's credit rating of BBB+/Baa1 or better: Yes, BBB+
Current dividend yield > 1.5x S&P yield: Yes, 5.27% vs. S&P @ 1.9%
Payout ratio < 60% (or <85% for utilities): No, 438% (however, with est. EPS of $2.99 - the payout ratio would be in line at 77.6%)
Comments: Morningstar.com lists the Forward P/E at 14.7 and current Price/Cash Flow at 7.5. Reasonable EPS growth expectations over the next several years is estimated at 5%. According to David Fish's U.S. Dividend Champion Listing found here, The Southern Company (SO) is listed as a dividend CHAMPION with 17 straight years of dividend increases.
Company Profile
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 in seven states, as well as provides gas marketing services, wholesale gas services, and gas midstream operations. It owns/operates 33 hydroelectric generating stations, 29 fossil fuel generating stations, 3 nuclear generating stations, 14 combined cycle/cogeneration stations, 33 solar facilities, 9 wind facilities, 1 biomass facility, and 1 landfill gas facility. As of February 22, 2017, it had 44,000 megawatts of generating capacity and 1,500 billion cubic feet of combined natural gas consumption and throughput volume serving 9 million electric and gas utility customers. 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 Southern Company was founded in 1945 and is headquartered in Atlanta, Georgia.
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