Southern Company Outperforms Market So Far This Year
The electric utility Southern isn't the place where most investors look for market leadership.
Yet utilities have done well this year.Southern ( SO ) is up about 8% year-to-date, easily outperforming the major indexes, which are bobbing around the break-even line.
The stock pays a hefty dividend, which adds to the outperformance. Southern's annualized dividend yield is 4.7% vs. about 1.9% for the S&P 500.
On April 21, Southern announced that it was increasing its quarterly dividend from 50.75 cents a share to 52.50, payable June 6 to shareholders of record as of last Monday.
This year's outperformance might not last. In 2013, Southern outperformed the S&P 500 through May 1 but couldn't keep up with the market. Dividends excluded, the S&P 500 rallied to a 30% gain for the year while Southern slipped 4%.
Some income investors, though, aren't much concerned if utilities like Southern trail the indexes. They want the sizable dividend and the partial protection in bear markets that conservative stocks offer.
For instance, during the 2007-09 market meltdown, the S&P 500 dived 58%. Southern held its loss to 35%, and the company kept increasing its payout during the recession.
During the 2000-02 bear market, the S&P 500 slid about 51%. Southern more than doubled in price and the payout rose during the recession.
Southern's earnings and revenue growth are generally modest. The five-year growth rates are 4% for earnings and 1% for sales. The five-year earnings Stability Factor is 3 on a scale of 0 (calm) to 99 (wild).
The stock cleared a yearlong saucer with handle in April. Southern rose 2% above the 45.93 buy point and then retreated. The stock appears to be finding support just above its 50-day line.