IBD’s Income Investor highlights top dividend stocks with strong fundamental characteristics and bullish price action. Utility giant Southern (SO) is today’s perfect pick, trading at all-time highs while boasting strong growth and a long track record of dividend increases.
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The Utility-Electric Power group is red-hot so far in 2022, ranking 21st out of 197 industry groups that IBD tracks. It’s outperforming amid record-breaking electricity demand and a flight to safety, from high market volatility to classic defensive names.
Southern serves customers in Alabama, Georgia, Florida and Mississippi. The utility derives almost half its power from natural gas, with smaller segments in coal, nuclear and renewables. As one of America’s largest natural gas distribution companies, it also benefits from the Russia-Ukraine war price surge.
SO stock currently offers an annual 3.44% dividend yield. This is on the low end for utility peers but well above the S&P’s 1.4% average yield. The company also has a long track record of dividend growth. It has increased dividends for 21 consecutive years.
Top Dividend Stocks: Southern Reports Record Quarter
In addition to offering a stable dividend, Southern is growing steadily.
In second-quarter results released July 28, the company reported $1.07 profit per share on $7.2 billion revenue. Revenue rose 38.6% year over year as the second hottest June on record fueled heavy electricity demand. Crisis-driven natural gas prices also added to quarterly results.
Market watchers expect slow but steady growth to continue through 2023. Analysts see annual EPS rising from $3.41 per share in 2021 to $3.58 this year, and $3.80 in 2023.
New reactors at Southern’s Votgel nuclear plant are finally expected to come online next year, to meet increasing demand. Delays and cost overruns have plagued the project, which is the only U.S. nuclear expansion now underway. Investors should also anticipate a leadership change. Long-term CEO Tom Fanning is expected to step down upon the project’s completion.
This dividend stock hit new highs on Friday and is currently trading in the 5% buy zone, after breaking through a 77.33 buy point.
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Source: https://www.investors.com/research/the-income-investor/top-dividend-stocks-southern-breaks-out-amid-high-electricity-demand/?src=A00220&yptr=yahoo