SSE new dividend targets set well above inflation!
2010 2013: SSE new dividend targets set at 2 per cent above inflation
On 19 May 2010, Scottish and Southern Energy announced its intent to increase its full-year dividend per share by at least 2 per cent more than Retail Price Index (RPI) inflation in each of the three financial years to March 2013, with annual above-inflation increases also being targeted for the subsequent years.
What about previous periods?
Between 2007 and 2010, SSE targeted dividend increases of at least 4 per cent above inflation in each of the three financial years, with sustained real growth thereafter.
The final dividend declaration of 49 pence per share for the year to March 2010, making a full-year dividend of 70 pence, amounted to an increase of 6.1 per cent on the previous year, representing SSE's eleventh successive annual above-inflation dividend increase.
In comparison, its first full-year dividend amounted to 25.7 pence after it was formed in 1999.
Scottish and Southern Energy is one of just seven FTSE 100 companies to have delivered better-than-inflation dividend growth every year during this period.
With SSE new dividend targets, the group is likely to remain one of the very few FTSE100 companies with this kind of a track record.
So, how much dividend can we expect in 2013?
Assuming, on average, a similar inflation rate of 2.8 per cent (the average rate in the five years to March 2010) over each of the next three years, the achievement of these above-inflation targets will mean that Scottish and Southern Energy's full-year dividend per share in 2013 will reach at least 80 pence, which is more than three times the first dividend it paid, in 1999.
In its full-year results for 2009/10, the company reiterated the primacy of the dividend. Chairman Lord Smith of Kelvin said,
"Our first responsibility to shareholders is to deliver sustained real growth in the dividend. Having assessed the progress made over the past few years, and the options for growth that we have developed for the next few years, the Board is confident that SSE can achieve these new targets for above-inflation dividend growth."
Ian Marchant, Chief Executive of SSE, said:
"Investors and pension funds rely on dividends for income"
"In setting these new dividend targets, we have been very conscious of the need to make sure they are realistic and attainable, to give shareholders the fullest possible confidence in their achievability."
"We believe they can be achieved while maintaining a dividend cover consistent with our established range."
How is Scottish and Southern Energy doing so far?
Earlier in November, 2010, SSE new dividend targets were reiterated in its half year results, 2010. In its half year results announcement, Scottish and Southern Energy confirmed its
intention to deliver a full-year dividend of at least 74.5 pence per share, in line with SSE new dividend targets.
WE WOULD LIKE TO POINT OUT, THAT:
1.√the above mentioned Dividend Update is solely an example of a UK listed company's current and future dividend intentions and is not to be construed as a share recommendation. Neither Early Retirement Investor nor EMAR Publishing are registered as an investment advisor or as an independent financial advisor and do not provide individualised advice
2.√the price of shares and investments and the income derived from them can go down as well as up, and investors may not get back the amount they invested
3.√where the information consists of pricing or performance data, the data contained therein has been obtained from company reports, financial reporting services, periodicals, and other sources believed reliable
4.√data computations are not guaranteed by Early Retirement Investor.com or any of the data providers and may not be complete.
5.√The editor or contributors may have an interest in the share mentioned.
6.√Dividend yields move up and down. As a company’s share price increases the dividend yield falls. And vice versa: if the share price falls the dividend yield increases.
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