Persistent capital intensity, evidenced by a 61.4% CapEx-to-revenue ratio in 2025Q4, has resulted in negative free cash flow in five of the last seven quarters, complicating the sustainability of its $776 million quarterly dividend payout.
| Cash from Operations | 9.78B | 9.8B |
| Operating CF Margin % | - | 33.17% |
| Operating CF Growth % | 21.96% | - |
| Net Income | 4.36B | 4.17B |
| Depreciation & Amortization | 6.2B | 6.03B |
| Stock-Based Compensation | 143M | 136M |
| Deferred Taxes | 503M | 618M |
| Other Non-Cash Items | -1.61B | -1.55B |
| Working Capital Changes | 305M | 399M |
| Change in Receivables | 130M | -124M |
| Change in Inventory | -51M | 44M |
| Change in Payables | -451M | -290M |
| Cash from Investing | -14.55B | -13.96B |
| Capital Expenditures | -13.24B | -12.74B |
| CapEx % of Revenue | 43.89% | 43.1% |
| Acquisitions | 0 | - |
| Investments | - | - |
| Other Investing | -649M | -571M |
| Cash from Financing | 3.42B | 4.7B |
| Debt Issued (Net) | 0 | - |
| Equity Issued (Net) | 2.13B | 1.62B |
| Dividends Paid | -3.06B | -3.02B |
| Share Repurchases | 0 | 0 |
| Other Financing | -772M | -704M |
| Net Change in Cash | -1.34B | 539M |
| Free Cash Flow | -3.47B | -2.94B |
| FCF Margin % | -11.49% | -9.93% |
| FCF Growth % | - | - |
| FCF per Share | -3.02 | -2.60 |
| FCF Conversion (FCF/Net Income) | -0.79x | 2.26x |
| Interest Paid | 2.84B | 2.69B |
| Taxes Paid | 85M | 284M |
Heavy capital expenditure burden
As reported in financial statements, Southern Company's OCF/NI ratio has fluctuated significantly, ranging from a low of 0.90 in 2026Q1 to a high of 6.24 in 2025Q4, indicating that net income is a poor proxy for the actual cash generation capacity of the utility's core operations.
The wide variance between net income and operating cash flow suggests that non-cash charges and working capital swings heavily influence reported profitability. Investors should monitor whether this volatility reflects structural timing differences in regulatory rate recovery or underlying operational inefficiencies that mask true cash earnings.
Based on Southern Company's reported figures, the firm has struggled to maintain positive free cash flow, recording negative FCF in five of the last seven quarters, with a peak deficit of $1.7 billion in both 2026Q1 and 2025Q4 due to aggressive capital spending requirements.
The consistent inability to generate positive free cash flow suggests that the company is heavily reliant on external financing to fund both its capital program and dividend obligations. This trajectory warrants further investigation into the sustainability of current payout levels if capital intensity does not moderate in the near term.
According to recent SEC filings, Southern Company's capital expenditure as a percentage of revenue reached a staggering 61.4% in 2025Q4, reflecting a sustained period of heavy investment that consistently outpaces the cash generated from the company's regulated utility operations across the observed seven-quarter period.
The elevated level of capital intensity appears to be a structural feature of the business rather than a temporary spike, likely driven by infrastructure modernization and regulatory mandates. This persistent spending profile limits financial flexibility and forces the company to maintain a delicate balance between asset growth and liquidity preservation.
As indicated by the provided cash flow data, Southern Company has consistently paid out approximately $730 million to $776 million in quarterly dividends, even during periods where free cash flow was deeply negative, such as the $1.7 billion shortfall observed in the most recent 2026Q1 period.
The decision to maintain dividend payments despite significant cash outflows suggests a strong commitment to shareholder returns, yet it may also indicate a reliance on debt markets to bridge the funding gap. Analysts should monitor whether this capital allocation strategy remains viable if the current negative free cash flow trend persists.
Quick answers to the most common questions about buying SOMN stock.
The Southern Company (SOMN) generated $9.80B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
The Southern Company (SOMN) reported negative free cash flow of $2.94B in 2025, indicating capital requirements exceeded cash from operations.
The Southern Company (SOMN) spent $12.74B on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, The Southern Company (SOMN) returned $3.02B to shareholders via cash dividends. This shows the company's commitment to returning capital to its equity investors.