Three electricity utilities

[Dod101]

Moderator Message:
Split off from here. C.

This week's IC has an interesting article about our three electricity utilities, SSE, Nat Grid and Centrica. Of the three it rates SSE as well above the other two but I was more interested in its comments about the future for SSE and its changing business. It sees it as much more of a growth share than an income share. I have held it for more than 20 years and I know that it used to prize its dividend growth above all else but recently as we know it has cut its dividend and is to do so again from its new financial year starting at 1 April 2023. As they say it is now mainly a generator rather than a full service utility. It is the UK's largest domestic onshore and offshore wind energy generator. They say that the quality of earnings from 'green' versus 'thermal' power should be enough to drive a material long term rerating of the share.

Between 2008 and 2019, the TSR was a mere 3% p a, but in the past three years it has averaged 21%, mostly capital growth. It expects that trend to continue.

Interesting I thought. We do not have to believe the IC of course but it rather makes sense to me.

Dod

[BullDog]

This week's IC has an interesting article about our three electricity utilities, SSE, Nat Grid and Centrica. Of the three it rates SSE as well above the other two but I was more interested in its comments about the future for SSE and its changing business. It sees it as much more of a growth share than an income share. I have held it for more than 20 years and I know that it used to prize its dividend growth above all else but recently as we know it has cut its dividend and is to do so again from its new financial year starting at 1 April 2023. As they say it is now mainly a generator rather than a full service utility. It is the UK's largest domestic onshore and offshore wind energy generator. They say that the quality of earnings from 'green' versus 'thermal' power should be enough to drive a material long term rerating of the share.

Between 2008 and 2019, the TSR was a mere 3% p a, but in the past three years it has averaged 21%, mostly capital growth. It expects that trend to continue.

Interesting I thought. We do not have to believe the IC of course but it rather makes sense to me.

Dod

I have mixed feelings about SSE. I sold National Grid and bought SSE before they announced the huge Dogger Bank projects. Those projects are very attractive to me and at the time SSE paid a higher yield than NG. I don't regret the swap because SSE is a clear leader in the UK for the renewable energy business. What I didn't expect was the reduction in dividend to pay for Dogger Bank. I am holding on but I wonder if there's better prospects out there? At the moment, even with the reduction in dividend, the growth of SSE renewables and future potential means that in the UK the answer is no. I think. At least for now.

When the shares were higher than they are presently, I did skim off profits to reinvest elsewhere at higher yield. I have no plans for further reduction of SSE holding at the moment. Nor to increase.

[Dod101]

This week's IC has an interesting article about our three electricity utilities, SSE, Nat Grid and Centrica. Of the three it rates SSE as well above the other two but I was more interested in its comments about the future for SSE and its changing business. It sees it as much more of a growth share than an income share. I have held it for more than 20 years and I know that it used to prize its dividend growth above all else but recently as we know it has cut its dividend and is to do so again from its new financial year starting at 1 April 2023. As they say it is now mainly a generator rather than a full service utility. It is the UK's largest domestic onshore and offshore wind energy generator. They say that the quality of earnings from 'green' versus 'thermal' power should be enough to drive a material long term rerating of the share.

Between 2008 and 2019, the TSR was a mere 3% p a, but in the past three years it has averaged 21%, mostly capital growth. It expects that trend to continue.

Interesting I thought. We do not have to believe the IC of course but it rather makes sense to me.

Dod

I have mixed feelings about SSE. I sold National Grid and bought SSE before they announced the huge Dogger Bank projects. Those projects are very attractive to me and at the time SSE paid a higher yield than NG. I don't regret the swap because SSE is a clear leader in the UK for the renewable energy business. What I didn't expect was the reduction in dividend to pay for Dogger Bank. I am holding on but I wonder if there's better prospects out there? At the moment, even with the reduction in dividend, the growth of SSE renewables and future potential means that in the UK the answer is no. I think. At least for now.

When the shares were higher than they are presently, I did skim off profits to reinvest elsewhere at higher yield. I have no plans for further reduction of SSE holding at the moment. Nor to increase.

The same article does not think too much of National Grid and does not like Centrica. I will keep SSE and will see what sort of yield it settles at over the next year after the dividend cut but I am now at a stage where I am not too bothered about a high yield and if SSE gives a better TSR in its new guise I will not be quite happy. It has always struck me as a well run company.

Dod

[idpickering]

This week's IC has an interesting article about our three electricity utilities, SSE, Nat Grid and Centrica. Of the three it rates SSE as well above the other two but I was more interested in its comments about the future for SSE and its changing business. It sees it as much more of a growth share than an income share. I have held it for more than 20 years and I know that it used to prize its dividend growth above all else but recently as we know it has cut its dividend and is to do so again from its new financial year starting at 1 April 2023. As they say it is now mainly a generator rather than a full service utility. It is the UK's largest domestic onshore and offshore wind energy generator. They say that the quality of earnings from 'green' versus 'thermal' power should be enough to drive a material long term rerating of the share.

Between 2008 and 2019, the TSR was a mere 3% p a, but in the past three years it has averaged 21%, mostly capital growth. It expects that trend to continue.

Interesting I thought. We do not have to believe the IC of course but it rather makes sense to me.

Dod

I have mixed feelings about SSE. I sold National Grid and bought SSE before they announced the huge Dogger Bank projects. Those projects are very attractive to me and at the time SSE paid a higher yield than NG. I don't regret the swap because SSE is a clear leader in the UK for the renewable energy business. What I didn't expect was the reduction in dividend to pay for Dogger Bank. I am holding on but I wonder if there's better prospects out there? At the moment, even with the reduction in dividend, the growth of SSE renewables and future potential means that in the UK the answer is no. I think. At least for now.

When the shares were higher than they are presently, I did skim off profits to reinvest elsewhere at higher yield. I have no plans for further reduction of SSE holding at the moment. Nor to increase.

The same article does not think too much of National Grid and does not like Centrica. I will keep SSE and will see what sort of yield it settles at over the next year after the dividend cut but I am now at a stage where I am not too bothered about a high yield and if SSE gives a better TSR in its new guise I will not be quite happy. It has always struck me as a well run company.

Dod

I hold both SSE and NG., and that’s how it’s going to stay for the long term. I’m not worried about either of them.

Ian.

[Dod101]

This week's IC has an interesting article about our three electricity utilities, SSE, Nat Grid and Centrica. Of the three it rates SSE as well above the other two but I was more interested in its comments about the future for SSE and its changing business. It sees it as much more of a growth share than an income share. I have held it for more than 20 years and I know that it used to prize its dividend growth above all else but recently as we know it has cut its dividend and is to do so again from its new financial year starting at 1 April 2023. As they say it is now mainly a generator rather than a full service utility. It is the UK's largest domestic onshore and offshore wind energy generator. They say that the quality of earnings from 'green' versus 'thermal' power should be enough to drive a material long term rerating of the share.

Between 2008 and 2019, the TSR was a mere 3% p a, but in the past three years it has averaged 21%, mostly capital growth. It expects that trend to continue.

Interesting I thought. We do not have to believe the IC of course but it rather makes sense to me.

Dod

I have mixed feelings about SSE. I sold National Grid and bought SSE before they announced the huge Dogger Bank projects. Those projects are very attractive to me and at the time SSE paid a higher yield than NG. I don't regret the swap because SSE is a clear leader in the UK for the renewable energy business. What I didn't expect was the reduction in dividend to pay for Dogger Bank. I am holding on but I wonder if there's better prospects out there? At the moment, even with the reduction in dividend, the growth of SSE renewables and future potential means that in the UK the answer is no. I think. At least for now.

When the shares were higher than they are presently, I did skim off profits to reinvest elsewhere at higher yield. I have no plans for further reduction of SSE holding at the moment. Nor to increase.

The same article does not think too much of National Grid and does not like Centrica. I will keep SSE and will see what sort of yield it settles at over the next year after the dividend cut but I am now at a stage where I am not too bothered about a high yield and if SSE gives a better TSR in its new guise I will not be quite happy. It has always struck me as a well run company.

Dod

Sorry, I meant to say on the last line, 'I will be quite happy'

Dod

[bruncher]

I'm often puzzled by the lack of discussion about foreign shares on Lemon Fool. I hold Iberdrola which owns Scottish Power and has interests in many countries inc USA.

[Bouleversee]

I hold SSE, CNA and NG; SSE has done best by far for me. Am still sitting on quite a large loss on CNA, though it has improved quite a lot of late. I wasn't pleased about windfall taxes when they hadn't done much for shareholders in recent times.

[Lootman]

I'm often puzzled by the lack of discussion about foreign shares on Lemon Fool. I hold Iberdrola which owns Scottish Power and has interests in many countries inc USA.

Yes, NextEra (NEE) is a Florida based utility with a large presence in renewables. Often considered to be the leading growth utility in the US, its yield is a modest 2% annually. But it has doubled in price in the last 5 years, and is up a remarkable 3500% over 40 years.

It is the only utility I hold.

[Pendrainllwyn]

I have held NextEra and NG. for some years. Both have served me well. I will hold long-term but not add to either. NextEra rarely looks cheap to me but the price keeps heading upwards. SSE I have looked at many times but never pulled the trigger. If I were to put more money into the sector today it would be in SSE.

Pendrainllwyn

[Gerry557]

I hold all 3 with SSE performing best and CNA worst and actually underwater.

Obviously the dividend was an aspect that I liked and the fact that it grew was a plus. Dividend cuts I find harder than SP falls so have been put off adding more of late.

SSEs advertised cut didn't go down well with me and I have wondered about what I should do. I've considered swapping it but probably will do nowt. The divi is expected to grow again after the cut. I suppose if the cash is invested wisely at above divi rates, which should be the case, then sticking might be OK and possibly a SP fall around cut time might allow me to up my holding at a reasonable cost.

The buy dividend is likely to drop to 3.5% from around 5% but if it grows too it won't be too shabby especially if they then can keep a reasonabe growth pattern in the dividend. Hopefully Mr Market might offer an opportunity or two to increase the likelihood of a good outcome.

It depends on things like Dogger being an investment opportunity rather than an expensive tulip and only time will tell.

I suppose another question is, we're past payouts too high and if it does well in the future, will it be windfall taxed.