Top Picks 2017: Southern Company

01/11/2017 6:00 am EST

Focus: STOCKS

Gordon Pape

Editor and Publisher, The Income Investor and the Internet Wealth Builder

Our Top Pick for conservative investors over the coming year is the second-largest energy utility in the U.S., notes dividend expert Gordon Pape, editor of The Income Investor.

Southern Company (SO) produces 44,000 megawatts of generating capacity and 1,500 billion cubic feet of combined natural gas consumption and throughput volume.

It serves nine million electric and gas utility customers in the Southeast through its subsidiaries. It is based in Atlanta.

I like this stock for its cash flow and its dependability. As with any utility, revenue is fairly predictable. In this case, it is rising faster than expected.

For the first nine months of the 2016 fiscal year (to Sept. 30), operating revenues were $14.7 billion compared with $13.9 billion for the same period in 2015, an increase of 5.7 per cent.

The quarterly dividend is $0.56 a share ($2.24 annually) to yield 4.5 per cent at the current price. The company has increased its payout every year since 2000.

Conclusion: Don’t expect a big capital gain here. What you’ll get instead is steady income and a stable core holding for your portfolio.

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