Duke Energy vs. Southern: Which is the Better Stock to Buy Today?

On the May 4, 2026, episode of The Morning Filter podcast, David Sekera and Susan Dziubinski answered a viewer question about why Duke Energy DUK was a recent stock pick of the week instead of Southern SO. In this excerpt from the show, Sekera explains why he likes one of these electric utilities stocks more than the other today.

Susan Dziubinski: Well, let’s move on to our question of the week. Now, as a reminder, if you’d like to ask Dave a question, the best way to reach us is via our email at themorningfilter@morningstar.com. Now, this week’s question is a follow-up from the April 20 episode of the podcast, where we talked about “forever stocks.” Now, James wants to know why one of your picks that week was Duke instead of Southern. James says that Southern is the only stock he’s bought and held, picking up shares at just $10 per share and reinvesting forever. So Dave, what’s wrong with Southern?

David Sekera: Absolutely nothing wrong with Southern, Susan. So I think, and the reason I like this question is it kind of gets back to what we talked about originally with that question, is I don’t think that there’s anything that you would consider a buy-and-hold. I think you need to buy and then manage those positions such that if there are changes in the investment thesis or changes in the outlook, and then depending on what’s going on with the stock price in the market, there’s always good times to take some profit off the table, and there’s always good times to buy more and dollar-cost-average down. Now, specifically with Southern and Duke, there are really two reasons why we picked Duke over Southern when we were looking for a utility stock pick. So the first is that these are very different growth stories. Southern is much more focused on data center growth.

It’s much more of a data center and AI play than Duke. The valuation incorporates a much higher amount of growth coming from those data centers. So it requires more capex spending here over the next couple of years to be able to build out the capacity for those data centers. Overall, this is one where we think the earnings probably grow faster, but I think the higher capex spending is also going to limit the dividend growth over the next couple of years. Duke, we look at being a much more diversified growth story. It’s really based on population growth within the geographic areas that they operate in. We’re seeing some replacement of coal plants with gas over time, so we’ll see rate improvements coming from that. We think they’re in very good regulatory rate environments, looking for improved operations over time. It’s a different story than what we’re seeing with Southern.

Secondly, when I look at both of these stocks, Duke was much more attractively valued when we picked Duke. Duke was only a 3-star stock, but it was trading at a slight discount, and it had a slightly higher yield at 3.4% for the dividend, where Southern was trading at a 19% premium. That put it in 2-star territory. In this case, what we’re seeing is that Southern is trading at a much higher P/E ratio in the marketplace because the market is already pricing in that higher growth rate. In this case, I don’t think there’s anything wrong with it as a buy-and-hold strategy, but this might be another one where it’s a good opportunity that you can buy and manage that position. So, depending on what you’re looking for in your portfolio, if you want to hold Southern and you’re willing to go through maybe some ups and downs in the stock price over time, that’s fine.

Or maybe this is one where you could lock in some profits on Southern and use those proceeds then to reinvest into Duke. This could be one where maybe you can manage your position a bit here over the next couple of quarters.

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