History Says This Dividend Stock Can Protect Your Portfolio if a Stock Market Slump Is Coming

Resumen detallado

Southern Company's stock outperformed the S&P 500 during previous bear markets, but there's more to this story than the stock price.

With the S&P 500 index (SNPINDEX: ^GSPC) hovering near all-time highs despite geopolitical conflicts, high inflation, and concerns around an AI bubble, investors are worried about a stock market slump. Southern Company (NYSE: SO) can help, but you have to look at the full picture to understand why. And that means considering both the stock price and the importance of collecting a reliable dividend. Here's what you need to know.

Wall Street tends to throw the baby out with the bathwater when a bear market hits. So there aren't many places to hide. Usually, the best you can hope for is to own stocks that don't go down as much as the market. Southern Company has outperformed, meaning it didn't fall as much, during three of the last four bear markets.

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The oddball in that mix was the bear market associated with the coronavirus pandemic, when Southern's stock fell slightly more than the S&P 500 index. That downturn, however, was an unusual one because of the economic shutdowns used to slow the spread of the illness. That hit utilities hard because investors feared that business-related revenues would collapse. Luckily, Southern Company survived the period just fine. On the whole, if you are looking for a safe place in a storm, Southern Company looks like a good option.

That said, regulated utilities are known for both their reliable businesses and their reliable dividends. On the dividend front, Southern Company is a standout. For starters, it offers an attractive dividend yield of 3.2% as of this writing. The S&P's yield is a tiny 1% or so. That allows you to focus on collecting an above-market dividend rather than on stock prices during a downturn.

You can take further comfort from the fact that the dividend has been…

Staying…

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