Assessing the Upcoming Dividend and Long-term Sustainability for SSE PLC (SSEZY, Financial)
SSE PLC (SSEZY) recently announced a dividend of $0.25 per share, payable on 2024-03-15, with the ex-dividend date set for 2024-01-11. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into SSE PLC's dividend performance and assess its sustainability.
What Does SSE PLC Do?
SSE PLC is an energy holding company based in the United Kingdom. The bulk of SSE PLC's profit comes from the company's 10.8 GW of power generation and its electricity transmission and distribution networks. The firm is also involved in smaller related businesses such as gas storage and energy services.
A Glimpse at SSE PLC's Dividend History
SSE PLC has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down SSE PLC's Dividend Yield and Growth
As of today, SSE PLC currently has a 12-month trailing dividend yield of 4.85% and a 12-month forward dividend yield of 4.45%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, SSE PLC's annual dividend growth rate was -1.10%. Extended to a five-year horizon, this rate decreased to -2.20% per year. And over the past decade, SSE PLC's annual dividends per share growth rate stands at 0.20%.
Based on SSE PLC's dividend yield and five-year growth rate, the 5-year yield on cost of SSE PLC stock as of today is approximately 4.34%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, SSE PLC's dividend payout ratio is 1.74, which may suggest that the company's dividend may not be sustainable.
SSE PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks SSE PLC's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. SSE PLC's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and SSE PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. SSE PLC's revenue has increased by approximately 20.80% per year on average, a rate that outperforms approximately 85.36% of global competitors.
Engaging Conclusion: Dividend Prospects for SSE PLC
Considering SSE PLC's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should weigh the current yield against the potential for dividend sustainability. While the yield remains attractive, the negative growth rate and high payout ratio could raise concerns about future dividend reliability. Investors may want to monitor the company's financial health and industry trends closely to make informed decisions. For those seeking income-generating stocks, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
