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Southern Company: A "Safe Haven" Utility
08/04/2020 5:00 am EST
With more than 4.4 million customers and approximately 46,000 megawatts of generating capacity, Atlanta-based Southern Company (SO) is the premier energy company serving the Southeast, explains growth and income expert Bryan Perry, editor of the industry leading advisory, Cash Machine.
Southern Company is the second-largest U.S. utility organization that has large, regulated business operations and it is further working to strengthen these, which will provide stability to SO’s revenues and cash flows, as well as support dividend growth.
The company provides power to Florida, Georgia, North Carolina, Alabama, Oklahoma, Texas, Nevada and New Mexico. The population migration to these states is a secular trend that will keep earnings growing for years to come. More people and more new businesses translate to more need for power.
Southern has been reporting healthy financial numbers due to the strong backing of its large, regulated asset base. The stock offers a solid dividend yield of 4.93%, which is supported by its operating cash flow yield of 15%.
The company generates almost 90% of its earnings from regulated operations, which provide stability to its cash flows. In addition, the company has been actively increasing its renewable energy asset base.
It owns and/or operates 30 hydroelectric generating stations, 24 fossil fuel generating stations, three nuclear generating stations, 13 combined cycle/cogeneration stations, 42 solar facilities, 10 wind facilities and one biomass facility.
The company’s fundamentals are strongly backed by its large and growing capital investment plan, which, in turn, keeps its earnings rising. Southern Company is a very timely addition to our Safe Haven Portfolio. Buy under $55.
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