Southern Falls as Utilities Lose Investors’ Favor: Atlanta Mover

Southern Co. (SO), the second-largest U.S. power company by market value, fell to its lowest price in five months as investors lost enthusiasm for utilities.

The utility owner fell 1.9 percent to $45.05 at the close in New York.

Investors who flocked to regulated utilities such as Atlanta-based Southern, for their high dividend payout ratios may now be moving to riskier stocks after the Federal Reserve announced plans to buy mortgage securities, Paul Patterson, a New York-based utilities analyst with Glenrock Associates, said in a telephone interview.

“You could have some weakness in defensive names like utilities as investors look for riskier investment options,” Travis Miller, Chicago-based director of utilities research for Morningstar Inc. (MORN), said in a telephone interview.

The Standard & Poor’s 500 Utility Index fell 0.8 percent amid a worldwide stock rally sparked by news the Fed will expand holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month.

Investors have soured on utilities in recent weeks as consumers curb their electricity consumption, Angie Storozynski, a New York-based utilities analyst with Macquarie Capital USA Inc., wrote in a Sept. 4 note to clients.

The Standard & Poor’s 500 Utility Index has declined 3.8 percent since the start of August while the broader index rose 6.6 percent, according to data compiled by Bloomberg.

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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