Southern Company operates utilities across the southeastern U.S.
The utility offers a 3.4% dividend yield and is seeing strong electricity demand in its region.
It plans to build 10 GW of new power generation capacity over the next several years.
Data centers need power, and Southern Company (NYSE: SO), an electric utility owner and operator, benefits. For investors seeking passive income along with upside from the data center energy boom, Southern Company offers an attractive 3.4% dividend yield.
The utility provider pays dividends quarterly, so to earn an average of $600 in dividend income per month, or $7,200 annually, you would need to invest about $212,000 in Southern Company stock at its current price. Here's what investors should know about this steady utility and the growing data center opportunity it's pursuing.
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Data centers are popping up at a rapid pace, and growth in Southern Company's region has been particularly hot. Chief Financial Officer David Poroch told investors that data center electricity usage across the system grew 55% year over year in the second quarter. Active systemwide data center load exceeded 1.2 gigawatts (GW), up 500 megawatts (MW) from last year.
Southern Company has contracted over 17 GW of large-load customer agreements scheduled to come online through the mid-2030s. Southern Company's regulated utility, Georgia Power, has a 25-year, 3.2-gigawatt contract to serve OpenAI's data center campus in Effingham County.
Image source: Getty Images.
To meet these growing energy needs, Southern Company plans to build out 10 GW of new power generation resources, including natural gas units, turbines, battery energy storage systems, and hundreds of miles of new transmission lines. As part of this, it has also partnered with Alphabet's Google to support power uprates at the Vogtle and Hatch nuclear plants, adding 96 MW of capacity to the grid.
If you're looking for a dividend stock with exposure to the growing electricity demand of hyperscale data centers, Southern Company is a top utility stock to consider.
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Courtney Carlsen has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.