Marty Fridson is a leading expert on sophisticated strategies for income investors. In his Forbes/Fridson Income Securities Investor newsletter, he covers common stocks, convertibles, preferreds and other hybrid stock and bond vehicles.

Southern Company (SO) is one of the nation’s premier energy utility companies. Operations include electric transmission and distribution lines and more than 80,000 miles of natural gas pipeline.

SO provides affordable energy through its operating companies, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power; natural gas distribution through Southern Company Gas; and power generation through Southern Power.

The Southern Co. 4.95% fixed rate Fixed Rate Junior Subordinated Notes (SOJD) are callable at the company's option, anytime on or after the 01/30/25 initial call date at par plus accrued interest. It is an exchange traded bond. Par value is $25.

This investment is suitable for low- to medium-risk tax-deferred portfolios. Distributions are classified as interest and taxed as ordinary income. Buy up to $26.95 for a current yield of 4.59% and a 3.03% yield to call.

Edison International (EIX) is the parent company of electric utility and non-utility subsidiaries that generate and distribute electric power, in addition to providing energy services and technologies, including renewable energy. EIX’s primary subsidiary is Southern California Edison, one of the largest U.S. electric utilities.

Southern California Edison is not to be confused with Pacific Gas & Electric (PGE), the electric utility that was forced to file for bankruptcy due to forest fires. EIX continues to make significant progress towards mitigating wildfire risk.

EIX reported 2Q 2020 adjusted net income of $375 million or $1.00 per share, missing analysts’ $1.11 estimates. Core earnings were adversely affected by higher interest expense. Total revenues of $2.99 billion fell short of estimates but improved by 6.2% from a year earlier.

Dividends on this common stock are qualified and taxed at the 15%-20% rate. The current annualized yield on the common stock is 5.01%. This investment is suitable for low-risk investors.

Reaves Utility Income Fund (UTG) — four-star rated fund by Morningstar — seeks to provide a high level of after-tax total return, largely through tax-advantaged dividend income and capital appreciation.

UTG’s strategy is to invest at least 80% of its total assets in dividend-paying common and preferred stocks, as well as debt securities of companies within the electric and gas utility industries.

The remaining 20% of total assets may be invested in other securities, including money-market investments. The fund does invest directly in oil and gas companies. This investment remains suitable for low to medium-risk taxable portfolios. With this review, we are raising UTGs fair value price to $35.00 from $31.10.

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