A FTSE 100 UK renewable stock with promise. Are SSE shares a strategic investment?

first_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Kirsteen Mackay Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Kirsteen Mackay | Thursday, 4th February, 2021 | More on: SSE Image source: Getty Images. FTSE 100 energy stock SSE (LSE:SSE) appears to me to be emerging from the pandemic in better shape than its competitors. Since selling off its retail division, it’s been free to focus its efforts on its utility networks and renewables. Its networking division gives it a reliable income stream that provides a consistent dividend yield to investors. Meanwhile, its renewables division is operating in one of the hottest sectors of the century. SSE aims to triple its renewable energy output by 2030. I think this all makes growth very likely, so would I buy? Before I answer that, let’s look at the business.SSE shares steadyIn its Q3 trading update to December 31, SSE said it expects full-year adjusted earnings per share to come in between 85p and 90p. Based on this figure, its current price-to-earnings ratio (P/E) is around 17. With a projected full-year dividend of 80p per share, this amounts to a 5% dividend yield for shareholders.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential… Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Shares Get the full details on this £5 stock now – while your report is free.center_img Enter Your Email Address For regular stock market investing ideas and help with choosing the best UK shares to buy now, sign up to The Motley Fool today. The SSE share price has risen 7% in the past five years, although during this time, it’s seen considerable peaks and troughs. The FTSE 100 company is now in the middle of a divestment programme to shed £2bn of assets that don’t fit its green energy focus. Now that its retail unit has been sold off, the board hopes it can move towards a more stable and profitable future. With this in mind, it’s committed to a five-year plan to invest £7.5bn in projects such as the Viking wind farm in Shetland. And it’s in the running for a Danish wind farm too.Powering past the pandemicFor the £15bn company headquartered in Scotland, Covid-19 understandably poses problems. SSE expects the pandemic will reduce profits by £150m-£250m. Lockdowns have decreased the demand for energy across the board. This has been obvious in oil and gas, but it’s true of renewable energy too. With less industry in operation, it reduces the requirement for electricity. The company has had to adjust to home-working and safe working practices, which ultimately cost it money.However, in comparison to its peers, the stock appears to have fared better than most. While the share price is hovering around its pre-pandemic range, most rival shares have fallen. Centrica is down 40% in the past year, National Grid‘s share price is down 14% and Severn Trent is down 8%.Green energy initiativesGlobally, governments are bringing in green initiatives and climate change policies. This is vital to meeting targets in the Paris climate change agreement, and SSE is in a prime position to benefit from this exposure as it expands its clean energy ability. However, it’s not a free ride to a lucrative future. Competition is rising in the sector and many companies are making inroads to bring their products and technologies to market. Oil majors globally are putting vast sums of money into the sector and have the expertise at their fingertips.Yet I think a 5% dividend yield is hard to beat and with green energy such a big deal just now, I feel that having exposure to renewables in my portfolio is a strategic move. As a long-term investment, I think SSE seems a good UK share to buy. But I already own shares of BP and Shell so I won’t buy for now. I’m focusing on diversifying into other sectors. A FTSE 100 UK renewable stock with promise. Are SSE shares a strategic investment? FREE REPORT: Why this £5 stock could be set to surge Kirsteen owns shares of BP and Royal Dutch Shell B. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment.last_img

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