Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
The dividend cut took the market by surprise and will have spooked some income investors. Those that have waited may reap the future benefits of capital growth but that is always a less certain outcome. The Times article today suggests that the game may not be over however and that the SSE board have not made an altogether convincing case for keeping the company as one unit. We shall see.
I am keeping my shares, but need to admit it is a little disappointing, the divi cut. It feels like we are going backwards.
But granted, its required to fund new projects and investments, which will hopefully increase revenues and future profits.
It appears that a few holders closed or reduced their positions in SSE yesterday.
A little short sighted IMHO, but it seems to have settled now.
I still maintain that part of the SP drop yesterday was due to some general unrest in much of the market, and a lot of other shares also suffered a little.
Today's breakaway gap with larger than average volume, showed strong conviction in the gap direction. A volume increase on a breakout gap helps confirm that the price is likely to continue in the breakout direction.
Tomorrow will be interesting.
here's my take on the divi - it is being cut because Ofgem are cutting the allowed cost of capital and the divi will then rise in line with the allowance of the price formula. The growth from the renewables is not at this time providing any free cash because of the reinvestments and if it were a separate company it would be more highly rated and it will happen imv.
Happy for divis to be cut in return for future growth.
Growth is necessary to maintain rising dividend.
Has been given the thumbs down by the market. A high divi payer that announces a cut can expect to be sold off. Others offer higher divis.
As for the future the BOD clearly would rather keep the company as a bigger entity rather than split and create value - no doubt the activist will have something to say about that.
I think the market is generally having a down day, SSE isn't alone in the drop.
It will all even out I think.
We shouldn't forget that SSE is a dependable dividend king. Its paid a dividend every year for 20 years.
Thats worth a great deal, and as avocet123 stated, the value of our holdings will continue to rise over the next few years.
I personally think the value of this stock will rise considerably over the next decade.
lol, and i got to buy ‘em back at 1555, not 1625, thank you mr market!
as i suggested in october, conservative dividend rebasing, but also looks
like the market thinks takeover/breakup prospects here are receding.
Blink and you miss it.
A 4% yield on 60p is 1500... Surely not below..
My decision to hold through has back fired already, 6.6% down.
Left pocket, right pocket. Retained dividend will either sit on the balance sheet as cash, or used for investment in other energy assets.
Either increase the companies value over time.
It seems the market isn't keen on the report.
Open £16.25
Now £15.84, -4.5%
Being spanked. 4% down
The report looks good, its not clear why the dividend cut is required.
Debt seems under control.P
rofits look like they are on the rise, although this might be due to the improved market conditions since 2020 as a result of covid restrictions easing.
The company continues to expand and invest in new projects, and both materials and labor costs have increased a lot over the past year.
I suspect they have some big expansion plans that will need funding, maybe even aquisition of a smaller competitor.
It might be a case of short term pain for long term gain.
Agree, we all knew about the 5 year plan, the good reasons for the planned cut seem to be the huge spend on new renewables.
IMO Like BP, any cut in dividend will mean a dent to the SP. The FTSE investor does not value shares in the same way as across the pond, no matter how much growth ambitions the companies aspire. We'll see.
https://www.cityam.com/sse-pledges-in-12-5bn-renewable-spending-to-reach-net-zero-targets/
Not what i wanted to read - I was hoping the company would split itself in two but has instead come up with a hybrid of selling stakes in its networks to fund the green investment. I am wondering how the activists will react because this is half baked imv.
You did read it correctly Lutra. I can't imagine that this will be well received by investors, the second dividend cut in the space of a few years, but we'll see.
So if I am reading this correctly, SSE is planning to cut its dividend by about 25% in two years time, then letting it grow by 5% a year again thereafter? ...and this is described as attractive?!
"completion of current RPI linked dividend plan to March 2023
followed by a rebased dividend to 60p in 23/24 with attractive annual growth of at least 5% to March 2026"
Gavster-NBC
Thank you for that, I will have a search.
I've been invested in SSE since early 2020 and it now represents 5.12% of my portfolio,
I like the stock and view it as a constant part of my portfolio.
Hi Paul. If you scroll back on this forum 6 pages back to May/June, his video prompted some discussion. From my personal perspective I wasn't in full agreement as SSE remains one of my major holdings. Nevertheless he does go through main points of their presentations so becomes good watch for initial researching.
Gavster-NBC
Thanks for the links, they provide an interesting point of view.
The host does appear to be concerned, and put a good case.
I don't think caution is a bad thing, but I'm also not sure he has given consideration to the army of financial wizzards that SSE will have access to, and I doubt he is alone in considering the questions raised.
I think it inconcievable that SSE haven't got a strategy to account for these costs over the long term.
For me SSE isn't cheap, but it does offer good value, and cheap is not the same as good value.
Catiche
have a look at this:
https://www.ssethermal.com/flexible-generation/
https://www.sserenewables.com/our-sites/
Gavster-NBC
Thank you.
I've signed up.
Next interim dividend declared on 17th November, with an expected ex-dividend in January and payment in March.
No figure set as yet but I would expect somewhere around 24p per share is not unrealistic.