Southern Company (The) Series 2 (SOJF) Stock Analysis
SOJF offers a near-par 6.50% hybrid-income profile backed by Southern Company’s regulated cash flows, but leverage and long-duration rate risk temper the upside.
Overview
The Southern Company is a large regulated utility holding company serving approximately 9 million customers across the Southeast through Alabama Power, Georgia Power, Mississippi Power, Southern Power, and Southern Company Gas. The report focuses on SOJF, its Series 2025A 6.00% or 6.50% junior subordinated notes due March 15, 2085, offered in $25 denominations and trading at $25.09. **The central investment case is a 6.50% fixed coupon, or $1.625 annually, producing an approximately 6.48% yield near par.** Credit support comes from essential-service demand, regulated cost recovery, and 94% of EBITDA generated by regulated operations. Underlying growth is accelerating as data centers and hyperscalers connect to the Southeast grid: commercial sales grew 7.3% year over year in Q2 2026, data-center usage rose 55%, and more than 17 GW of large-load contracts are executed. Q2 adjusted EPS increased 23% to $1.13 despite essentially flat revenue, while operating cash flow improved to $4.28 billion in the first half. Near-term catalysts include the $81 billion capital program, OpenAI’s 3.2 GW contract, continued load ramps, and potential note redemption at par after March 15, 2030. Key offsets are elevated leverage, rate freezes through 2028, Fitch’s Negative outlook, and long-duration interest-rate sensitivity.