Over the past twenty-five years, the Board of Directors of an electric utility company with operations in Georgia, Alabama, Florida, and Mississippi called “Southern Company” have grown the dividend payments to shareholders by a compounded annual growth rate of 4.89%. This has been a fairly static figure. The ten-year dividend growth at Southern is 4%, the fifteen-year dividend growth is 4.3%, and the twenty-year dividend growth is 4.7%. The earnings usually grow about a percentage point higher, with the twenty-five year dividend growth at Southern being just shy of 6%.
Like most utilities, the firm is leveraged to the gills with $27 billion in debt and $10.4 billion of the debt due within five years. Southern makes $2.6 billion per year in profits, and is expected to make a total of $13 billion in profits over the next five years.
This is a pretty standard experience of being a utility … Read the rest of this article!