SSE and United Utilities: Dividends in the spotlight as utility giants report
Both SSE and United Utilities could increase dividends next week, in their respective half-year results announcements.
Dividend payouts are firmly in the spotlight as two of the UK’s biggest utility companies are set to report half-year results next week.
SSE, which specialises in electricity transmission and generation, and the North-west water supplier United Utilities, will update investors on Wednesday and Thursday respectively.
Shares in SSE are not far off their all time highs, up 10 per cent year-on-year, as it pushes ahead with a major £20.5bn plan to expand its renewable energy production.
The group cut its dividend in earlier in 2024 to 60p share in order to fund the development of its green assets. However, it has plans to grow payouts by five to 10 per cent up to 2027.
Investors will also be keeping a close eye on earnings per share (EPS), with SSE targetting a compound annual growth rate of between 13 and 16 per cent. Such an increase would take SSE’s EPS to between 175p and 200p per share, up from last year’s 158.5p.
Analysts are anticipating a “more modest rate of growth this year though,” according to AJ Bell’s Russ Mould.
Water and wastewater provider United Utilities could also hike dividends, much to the furore of those highlighting the widespread sewage leakages, creaking infrastructure and financial issues plaguing Britain’s water network.
The battle for control of crisis-hit Thames Water, which is scrambling to avert bankruptcy and temporary nationalisation, deepened last week after it emerged a second group of bondholders had tabled a fully underwritten offer to provide £3bn of new debt.
Analysts are expecting a four per cent increase in United Utilities’ full-year payment, to 51.9p per share, while revenue is expected to rise 10 per cent.
Concern surrounding Ofwat’s determination on water firm’s pricing and investment for the rest of the decade has weighed on United Utilties’ share price, which trades down nearly five per cent over the last six months.
The water regulator will confirm in December the AMP8 framework, a five-year plan covering water firm’s management of assets, investment in infrastructure and the level at which bills are set.
