Southern Company (NYSE:SO) is a stalwart Dividend Aristocrat and again paying shareholders a quarterly dividend of $0.72 per share today.  Anyone owning shares of the stock as of February 18, 2025 will be receiving these 3.25% dividend payments.  This payout marks another chapter in the company’s 77-year streak of delivering dividends equal to or greater than the prior quarter, making it a top-tier dividend paying stock all passive income lovers should be familiar.

Why Investors Like Dividends

Dividend stocks like Southern Company hold broad appeal for investors and retirees. Investopedia reports that from 1980 to 2019, 75% of the S&P 500’s total returns came from dividends, proving their outsized role in long-term wealth creation. This total return—encompassing capital gains and dividend income—proves again why balancing a portfolio with dividend stocks in additional to stock appreciation is important.

For retirees or those seeking passive income, dividends deliver a steady cash flow. A 3.25% yield (SO’s current dividend yield) is outpacing the current 3% inflation rate in the United States, which helps preserve purchasing power.

Dividend Aristocrat

Southern Company earns its Dividend Aristocrat title—reserved for S&P 500 firms with 25+ years of consecutive dividend increases—with a legacy spanning 77 years of uninterrupted payments since 1948. The company has raised its dividend for more than 30 years, cementing its aristocrat status.  The current $0.72 quarterly dividend annualizes to $2.88, yielding about 3.25%—which is above the utility sector average. Since 2004, the dividend has grown roughly 70%, with share price appreciation of 150%, blending income with steady gains.

CFO Daniel S. Tucker, during the February 20, 2025, earnings call, projected “modest increases” ahead, targeting a payout ratio of 60–65%. With 2024 adjusted earnings at $4.05 per share and 2025 guidance at $4.20–$4.30, this disciplined approach ensures sustainability while funding growth, a hallmark of Aristocrat reliability.

Is Southern Company a Quality Stock

Southern Company powers 9 million customers across the Southeast, operating electric utilities in Georgia, Alabama, and Mississippi, and natural gas distribution in four states. The company drives a diverse portfolio, including regulated utilities and Southern Power, which manages 13,000 megawatts of capacity (natural gas, solar, and wind), with 500 megawatts of solar under construction. A 50% stake in the Southern Natural Gas pipeline enhances its reach, while ventures in fiber optics and distributed energy signal innovation

Southern recently started a $63 billion five-year capital plan (2025–2029) that targets a 50,000-megawatt load growth pipeline by the mid-2030s, with data centers driving 80% of demand. This fuels 11% EPS growth in 2024 ($4.05) and a 5%–7% long-term trajectory, with a potential $10–15 billion in incremental investments.

The stock, up 32% over  the last five years, offers a 3.25% yield, and currently trading near $88 with a 52-week high of $92.50. Analysts’ $91 consensus target suggests upside, and the 18 Wall Street analysts covering the stock give it a 2.57 rating out of 5, or a sold “Hold”.

Institutions own over 69% of shares outstanding, with Vanguard and BlackRock leading the way as the largest public shareholders of record. CEO Christopher C. Womack’s “bright future” vision, tied to data center growth, underscores its stability and growth potential, making it a quality pick for conservative investors

$10,000 Investment in Southern Co. 10 Years Ago

To show the power of a solid dividend paying stock like Southern Company, let’s take a look at a $10,000 investment in SO stock 10 years ago today with dividends being reinvested.

That $10,000 investment would have purchased 212 shares of stock but after 10 years, the number of shares would have grown to 341 shares. The annualized return for the investment would be 11.88% and the reinvested dividend value would be over $10,000 (more than the original investment).

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