The latest addition to my dividend and income portfolio is 29 shares of the Southern Company. This purchase will increase my yearly income by $56.84 on a 4.62% yield. I'm actively trying to increase my utility holdings right now while prices are reasonable. I don't think I need to introduce SO or what they do, this one is one of the largest electric utilities in the United States. I like SO for a variety of reasons. The population in their service area is growing faster than the national average, it's diversified into a wireless telecom business, it's large and stable, it has a history of growing EPS better than peers, and it is currently building the first new nuclear reactor on US soil in 30 years. Obviously the yield is quite attractive. The payout ratio is fairly high, but I'd be thrilled to see dividend growth of 3-4%.
I did catch this one at the 52 week low, but the valuation I paid is about average historically speaking. Utilities have been pretty pricey most of 2012 as income investors have bid them up for the income. With bonds paying next to nothing investors need to find yield somewhere. So basically I'm okay paying an average valuation in a low interest rate environment. I certainly don't think this one is a bargain, but it's not terrible either. I like SO a lot and will be happy to collect the slowly growing dividends. This company is going to need to replace or upgrade many old coal power plants, it's something I will keep an eye on. Hopefully the new nuclear facility will help SO move further away from coal.
I might make one purchase in November. Right now I'm considering INTC, PPL, VZ, and NSC.