UK energy company SSE plans dividend cut
Bad new for shareholders in UK energy giant SSE PLC because the former Dividend Aristocrat has announced plans to rebase its dividend to 60 pence per share. Last year SSE also cut its dividend, ending a long history of increased dividends to shareholders.
This week SSE announced its plan to rebase its dividend to 60p in 2023/24 versus the analyst consensus of 86p. Last year SSE had paid a dividend of 80 pence per share, down from 97.5 pence in 2019. This was the first dividend cut by the UK company in more than 25 years.
Last year superb dividend history ended with SSE cutting its dividend by almost 18 percent to 80 pence. This followed 27 consecutive years of dividend increases by the electric utility company.
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It does not stop there for shareholders, because in a couple of years SSE plans a 60 pence dividend, down 25 percent from the 2020 level. Shareholders did not like the new dividend policy announcement with the share price of SSE dropping 7% on November 17 following the announcement.
SSE did however hike its dividend this year, with a full year payment of 81 pence per share, up 1% from 2020. At a current stock price of 1592 pence SSE yields 5.2%. SSE says it remains committed to the five-year dividend plan to March 2023, and will provide guidance on full-year adjusted earnings per share later in the year.
SSE PLC is engaged in the generation, transmission, distribution and supply of electricity, in the production, storage, distribution and supply of gas and in other energy services. Its segments include Electricity Transmission, Electricity Distribution, Gas Distribution, Renewables, Thermal Generation, Gas Storage, Business Energy, Airtricity, Enterprise and Energy Portfolio Management (EPM). It owns, maintains and invests in the electricity transmission network in the north of Scotland. It holds shares in Scotia Gas Networks, which operates two regulated gas distribution networks in Scotland and the South of England. It is also engaged in the generation of power from renewable sources, such as onshore and offshore windfarms and run of river and pumped storage hydro assets in the United Kingdom and Ireland. SSE engages in the storage of gas for the purpose of benefitting from market price fluctuations.