Southern Company Stock In A Dividend Portfolio

In January, the price of Southern Company stock was $53 per share, perhaps giving people some pause that the price of the Southeastern electric giant was drifting towards expensive territory. In January, the P/E ratio of Southern was 24, which is moderately concerning because this is company that has a long history of trading around 16x earnings for investors. This does not mean that Southern investors should have contemplated selling—after all, the company has compounded wealth at 15% annually since 1981 and you still got to collect 4% of the market price as a dividend, but it was the kind of price that should make you feel hesitant about making a large, substantial cash purchase in new shares (particularly if you care about how your stock performs compared to the S&P 500 in general over the next five years).

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