Check out the latest Southern Company earnings call transcript.

If you look into giant U.S. utility Southern Company (NYSE:SO), one of the first things you'll read about it is the troubles it has had building the Vogtle nuclear power plant. It's been an expensive and contentious process trying to get the project done, and it's still a few years away from completion. But that's a small part of Southern Company's business, and the stock's hefty 5.1% yield is probably worth the risk for investors willing to take on some near-term uncertainty. Here's why Southern Company is a buy for income investors despite all the bad press.

About that nuclear power plant

Vogtle is actually two projects in one, with the first nuclear reactor projected to be in service in 2021 and the second following in 2022. There's no way to candy coat it -- the project is behind schedule, and materially over budget. The company's original contractor, Westinghouse, even went bankrupt along the way. Shareholders have taken a hit, too, with a number of one-time charges related directly to Vogtle. The most recent charge of $1.1 billion was taken in the second quarter. In short, it has been a rough ride.

Nuclear power plants with steam rising from them

Image source: Getty Images

All of that said, Southern has stepped in and taken greater control of the Vogtle project. That should help ensure a smoother process from here on out. And it has also agreed to take on additional costs if there are further overruns. So at this point, there is little question of this project getting done -- it's just a matter of when. Nuclear power plants of the same design, meanwhile, have successfully started up in China, suggesting that the technology that Southern is betting on is sound.

So the Vogtle issue is far from ideal, but it looks like Southern is muddling through. Eventually, this too shall pass. When the reactors are finally up and running Southern will have two carbon-fee power plants to operate for decades into the future. And while investors are worried about this project, the stock is offering up one of the highest yields in the utility space.

The rest of Southern

The thing is, aside from Vogtle, Southern Company is a pretty boring utility. It owns eight regulated electric and natural gas utilities serving around nine million customers, largely in the southeastern United States. It also has a renewable merchant power businesses and long-haul transmission assets with revenues backed by long-term contracts. These are very stable operations that Southern has a long history of running very well.

SO Revenue (TTM) Chart

SO Revenue (TTM) data by YCharts

Over the 10 years through 2017 Southern's revenues grew at an annualized rate of around 4%. Incredible? No. But about what you'd like to see from a conservatively run utility. With operations focused around regions that are expected to see population growth in the future, there's no reason to expect a change of course here. This is doubly true since Southern's rates are largely regulated, meaning that price hikes are pretty much baked in so long as it can prove to government regulators that they are justified. The utility has a long history of achieving this end as it spends to upgrade its systems. Believe it or not, Vogtle is part of that spending.

One of the big problems, however, is that the Vogtle project has been a huge cash drain, pushing Southern's free cash flow into negative territory for many years now. Since it is spending more cash than it is generating, the utility has been adding leverage to pay for its building plans and to cover the dividend. Long-term debt stood at about 60% of the company's capital structure at the end of the third quarter.

However, the $41.4 billion of long-term debt on the balance sheet was down nearly 7% from the start of the year. Management is aware of the debt issue and is trying to do something about it, notably including selling non-core assets.

SO Financial Debt to EBITDA (TTM) Chart

SO Financial Debt to EBITDA (TTM) data by YCharts

The nature of the utility business is also important to consider here. Southern is regulated because it has a monopoly in the regions it serves. Those nine million customers noted above have no choice but to keep paying if they want their electricity and natural gas. And that means revenues are pretty consistent from year to year, allowing Southern to carry a heavier debt load than companies that lack such revenue consistency. Sure, it would be nice to see lower levels of debt, but there's no particular reason to worry about the current leverage statistics. In fact, its leverage is roughly in line with that of close peers like Duke Energy and Dominion Energy, which also have multi-billion dollar, multi-year investment plans in the works. And once Vogtle is complete, those nuclear plants begin adding to Southern's cash flows for decades into the future.

The takeaway

There's no question that Southern investors are facing some risks as the giant utility works to complete the troubled Vogtle project. But those risks aren't as bad as they may at first seem when you dig in a little.

Southern's largely regulated business continues its slow growth path. The Vogtle project is a near-term drain on resources, but the company is directly dealing with the problems. Debt is making up the difference financially because of Vogtle costs, but leverage appears to be a manageable issue. And while investors are fearing the worst, you can collect a fat dividend yield from what is really a pretty boring regulated utility at its core.