Southern Company

Southern Company (SO) is the utility parent company of Alabama Power, Georgia Power, Gulf Power and Mississippi Power. Other subsidiaries include Southern Power, which sells electricity in the wholesale market, Southern Nuclear, SouthernLINC Wireless and Southern Telecom.

On November 8, 2012, SO reported third quarter earnings of $976 million, or $1.11 a share, compared with $916 million, or $1.07 a share, for the third quarter of 2011.

For the nine months ended September 30, 2012, SO reported earnings of $1.97 billion, or $2.26 a share, compared with $1.94 billion, or $2.27 a share, for the nine months ended September 30, 2011.

Southern Company has increased its dividend annually since 2002. The current quarterly dividend is $.49, for an annual rate of $1.96. At a closing price of $43.11, the yield is 4.5%.

The following data is from Morningstar:  The payout ratio for the last five years has ranged from 70.0% to 84.1%. The average P/E ratio for the past five years has been 15.6 and the current P/E ratio (based on trailing 4-quarter earnings of $2.53) is 17.0%. The long-term debt as a percentage of capital is 46.2%.

Utility stocks can be an important part of a dividend income. I own shares of Southern Company in my retirement income portfolio.  I would consider buying more at $41.18 or less, and I would consider selling some shares at $49 or higher.  I believe SO is worthy of consideration as a utility holding. This is not a recommendation to buy but a suggestion for a stock to study. Do your own homework.