Our analysis is based on comparing The Southern Co. with the following peers – SCANA Corporation, Duke Energy Corporation, Dominion Energy, Inc., Entergy Corporation, American Electric Power Company, Inc., NextEra Energy, Inc., FirstEnergy Corp., PPL Corporation, NRG Energy, Inc. and El Paso Electric Company (SCG-US, DUK-US, D-US, ETR-US, AEP-US, NEE-US, FE-US, PPL-US, NRG-US and EE-US).
The Southern Co.’s dividend yield is 4.49 percent and its dividend payout is 83.90 percent. This compares to a peer median dividend yield of 3.67 percent and a payout level of 56.72 percent. This type of dividend performance might make it a good stock for dividend investors. However, the company’s relatively low dividend quality score of 25 out of a possible score of 100 raises questions on the sustainability of its robust payout ratio.
Dividend Quality Overview
- Over the last twelve months (prior to March 31, 2017), SO-US paid a medium quality dividend, which represents a yield of 4.49% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 4 were medium quality and 1 was low quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to March 31, 2017), SO-US paid a medium quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 2.28x), investing cash flow (coverage of -9.26x), issuance cash flow (coverage of 8.14x) and twelve-month prior cash (coverage of 0.35x), for a total dividend coverage of 1.51x.
These coverage ratio factors imply that the firm’s net cash inflow from issuance was required (in addition to operating and investment cash) to pay the dividend, which suggests a medium dividend quality.
|Dividend Yield (%)||4.56||4.83||4.19||4.58||4.32||4.49|
|Dividend Payout (%)||72.75||107.62||95.53||83.11||86.98||83.9|
A complete list of metrics and analysis is available on the company page.
The Southern Co. operates as a holding company, which engages in he distribution of natural gas through the natural gas distribution utilities. It operates through the following segments: Traditional Electric Operating Companies, Southern Power, Southern Company Gas, and All Other. The Traditional Electric Operating Companies segment refers to vertically integrated utilities that own generation, transmission and distribution facilities, and supplies electric services in the states of Alabama, Georgia, Florida, and Mississippi. The Southern Power segment constructs, acquires, owns, and manages generation assets such as renewable energy projects and sells electricity in the wholesale market. The Southern Company Gas segment distributes natural gas through natural gas distribution facilities in the states of Illinois, Georgia, Virginia, New Jersey, Florida, Tennessee, and Maryland. The All Other segment covers segments below the quantitative threshold. The company was founded on November 9, 1945 and is headquartered in Atlanta, GA.
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