I write about three strategies to create retirement income: Dividend Machine stocks, Discount Bond interest, and Covered Calls on dividend stocks. This post reviews Southern Companies as a solid, Dividend Machine.
Screening Criteria
Stocks move in and out of the Dividend Machine
universe all the time. This year we
expect more than 3.5% in yield and a 5 year history of dividend increases no
less than 4%. Some really great stocks miss the cut on yield and yield
increases. Today we have a widows and
orphans stock that is solid; it beats the 3.5% yield threshold, the dividend
increase threshold and like all Dividend Machines, earnings are greater than
the dividend and the debt to equity ratio D/E is within industry standards.
It is such a pleasure to profile this stock. I have owned it so long that my cost basis
is in single digits. Yet I have not
been so happy with it lately.
Southern Companies as a 2012 Dividend Machine
SO was a Dividend Machine in 2012 at a cost basis of
$47.31. http://www.themoneymadam.com/2012/06/utilities-mothers-milk-of-income.html Folks that is an 8.35% loss. But we always say that if we have to hold a
dog because we need the income, then let’s hope for not only income but income
increases. SO does not get the award for
biggest annual dividend increases but it meets our 2014 criteria of a 4%
increase of income per year.
SO yields 4.84% at the closing price of $43.37 on
9/15/2014. The yield alone makes me a
happy investor but I looked at the dividend increases again just to make sure
my income will go up if the overall market tanks like it did in 2009. Over the past 10 years, SO has delivered
annual dividend increases of 4.685%.
Southern Companies 2014 Dividend Machine Fundamentals
Seeking Alpha published an article recently
explaining how Southern Companies has turned around their operation. http://seekingalpha.com/article/2470155-why-investors-should-continue-holding-southern-company-for-the-long-run
.
I am going to add to my position. I like the yield and the dividend increases
and its solid nature. Consider SO for the income producing portion of your
investment portfolio.
TheMoneyMadam
