Be The Investor ResearchEversource’s 5% Yield Comes With a Regulatory Test
Eversource offers a larger yield and faster historical dividend growth than Southern, but a lower transmission return and a weaker 2026 earnings base make the November regulatory decision central to the case.
Eversource Energy’s roughly 5.0% yield stands above Southern Company’s 3.7%, and its dividend grew faster from fiscal 2020 through 2025. The trade-off is that Eversource enters 2026 with greater regulatory and balance-sheet pressure.
The comparison starts with earnings coverage. The source placed Eversource’s fiscal 2025 payout ratio at 63% of normalized earnings versus 68% for Southern. On fiscal 2026 consensus, however, Eversource’s ratio rises to about 68% as normalized earnings are expected to slip, while Southern’s falls toward 66%.
A Federal Energy Regulatory Commission order is part of the change. Eversource’s first-quarter release said the order reduced the base return on equity for New England transmission owners from 10.57% to 9.57% and led to a $43.9 million after-tax charge. A lower allowed return reduces earnings on transmission investment unless it is changed on appeal.
The balance sheet improved when Eversource sold its Aquarion water business and used proceeds to reduce parent debt. Even so, the source cited net debt near 5.64 times EBITDA, above Southern’s roughly 5.06 times.
Yield versus certainty
Southern has the stronger near-term growth trend, helped by data-center demand. Eversource offers more starting income and a decade-long record of keeping the payout ratio within a relatively narrow band. Management also reaffirmed a 5% to 7% annual earnings-growth objective through 2030 from a lower 2026 base.
The important distinction is between dividend capacity today and the rate of future increases. Eversource’s current payout appears covered, but repeating its historical dividend growth requires earnings to recover after the FERC setback. Southern’s smaller raises are backed by a longer record and less regulatory uncertainty around this specific issue.
Eversource expects a decision on its transmission return by November 30. That outcome, together with interest expense and debt reduction, will say more about the durability of the 5% yield than a simple ten-year extrapolation of past dividend growth.