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Tom Winnifrith Bearcast - Being a Purplebricks bull must be enough, I'd imagine, to turn a man to drink
Regular readers will know very well that I regard anyone who has a significant portfolio position in UK utility Scottish & Southern Electricity (SSE) as a hardcore dividend muncher with an effective stock market investor profile age of 85 years old…
Just over a week until Christmas and no sign of an imminent end yet to sloppy RNS updates. The headlines are going to be taken by the profit woopsie from ASOS (ASC) after it too agreed with Mike Ashley's November retail omnishambles comments of a few days ago and pulled down its growth and margin hopes. Thematically, it is much more than a survivor due to its online focus but it goes to show that it’s not easy out there. Anyhow, for those of you tempted by Sunday's Next (NXT) related musings, the in-price available has got that bit naturally cuter... However it is Scottish & Southern (SSE) that I wanted to write about…
I assume that dividend munchers are feeling a bit glum today as the FTSE 100's most boring company (as I previously dubbed it HERE), Scottish & Southern Electricity (SSE) is seeing its shares fall by 3% odd percent. So what is going on?
You may disagree with me (and feel free to post your selections in the comments below) but I think the FTSE-100's most boring company is...Scottish & Southern Electricity (SSE). I introduced this concept back in November, where I also observed that a proposed bit of consolidation in its core power supply/distribution business might actually provide something to write about other than an ultra-tedious dedication to the dividend (and very limited - if any - capital growth).
The most boring company in the FTSE-100 by far is in my opinion SSE plc (SSE, Scottish & Southern Energy). Admittedly utility companies are not meant to be sexy but SSE with its lack of growth and grinding up dividend payment (which encompasses pretty much all of its free cash flow) is the ultimate tortoise. Don't worry I know the hare and tortoise fable and my own investment style is hardly rabid but shoot me now if I make this one a top ten portfolio position at any time before the age of 85. However...
Hello Share Crimpers. Dividend hunters among you may want to consider SSE (SSE) shares. The prospective yield of Blighty’s third biggest supplier of electricity and gas is a juicy 6.7%. It’s attained this jolly figure after increasing its pay-outs every year since the turn of this century.
SSE (SSE) shares are currently trading at 1497p offering a yield of 5.79% and on a PE of 11.9. The dividend is covered around one and a half times, and the company has a good track record of consistently increasing its dividends. Many of SSE’s senior figures have said that dividend payment is one of their main priorities.
My jaded eye caught sight of a market news item that a major investment banking house is tipping SSE (helpfully it used to be called Scottish and Southern Energy) the utility shares. The share price (last seen) was 1504p; at that level the shares sell on an historic dividend yield of 5.6%.
“Millebandalised” SSE (SSE) shares are an analytical challenge. In recent weeks they have become less obscured and opened to more solid consideration; and arguably, shares for adding to a speculative buy list on both technical and fundamental considerations.
The politically astute strike by Ed.Milliband on energy companies was a 'game changer' for the shares as well as politics. SSE (SSE) which I had reviewed last August, months before the Milliband intervention, was a share which existed to pay most of its earnings out as dividends.
I have returned to SSE (formerly Scottish and Southern Electricity) the third largest independent public company supplying electricity to the UK after weakness in the share price has come down from its May high of 1690p to 1554p last seen; a decline of 9% It is back to below its trend line.
Events have fully justified my earlier bullish judgement elsewhere that SSE (SSE) shares were good value on a then estimated 6% prospective dividend yield. The share price rose with grace and charm to a recent May time peak of 1690p, from whence profit taking brought them down to a share price of 1627p last seen having done better that the FTSE 100 Index over six months in a bull market where risk stocks have been rising.
There are two things about energy supplier SSE Plc (it was until recently known as Scottish and Southern Electricity - which used to prompt thoughts of hairy highlanders incongruously tossing cables at a vicarage lawn tea party presided over by Miss Marples) which makes its shares a good dividend income play. But also, a share with some potential for long term capital appreciation relative to the FTSE 100 Index.
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