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Southern Company (The) Series 2 (SOJE)

Company Dividend Discount ModelIndustry: Regulated ElectricSector: Utilities

Valuation Snapshot

Stable Growth$44.78 - $72.67$57.30
Multi-Stage$57.72 - $63.07$60.35
Blended Fair Value$58.82
Current Price$94.77
Upside-37.93%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS2.82%4.70%2.672.742.622.512.422.322.192.081.901.77
YoY Growth---2.67%4.40%4.68%3.43%4.47%5.98%5.43%9.32%7.40%4.98%
Dividend Yield--2.90%3.85%3.77%3.46%3.90%4.28%4.26%4.65%3.81%3.42%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)4,459.00
(-) Cash Dividends Paid (M)2,988.00
(=) Cash Retained (M)1,471.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)891.80557.38334.43
Cash Retained (M)1,471.001,471.001,471.00
(-) Cash Required (M)-891.80-557.38-334.43
(=) Excess Retained (M)579.20913.631,136.58
(/) Shares Outstanding (M)1,108.131,108.131,108.13
(=) Excess Retained per Share0.520.821.03
LTM Dividend per Share2.702.702.70
(+) Excess Retained per Share0.520.821.03
(=) Adjusted Dividend3.223.523.72
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate1.76%2.76%3.76%
Fair Value$44.78$57.30$72.67
Upside / Downside-52.75%-39.54%-23.32%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)4,459.004,582.294,708.984,839.184,972.985,110.485,263.79
Payout Ratio67.01%71.61%76.21%80.80%85.40%90.00%92.50%
Projected Dividends (M)2,988.003,281.303,588.543,910.264,247.034,599.434,869.01

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate1.76%2.76%3.76%
Year 1 PV (M)2,978.893,008.163,037.44
Year 2 PV (M)2,957.573,015.983,074.96
Year 3 PV (M)2,925.703,012.803,101.61
Year 4 PV (M)2,884.812,999.893,118.37
Year 5 PV (M)2,836.252,978.373,126.13
PV of Terminal Value (M)49,383.0051,857.4854,430.18
Equity Value (M)63,966.2266,872.6869,888.68
Shares Outstanding (M)1,108.131,108.131,108.13
Fair Value$57.72$60.35$63.07
Upside / Downside-39.09%-36.32%-33.45%

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