UK Recovery Doubts Make Me Consider Turning To SSE PLC

With doubts surrounding the UK’s economic comeback surfacing recently, it makes me consider turning to SSE PLC (LON: SSE).

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Lies, damn lies and statistics is a quote that Fools like us probably come across all too often.

Indeed, it seems as though guests on any news item discussing the economy, or journalists writing about the economy, can find some data to support their argument.

So, I read the recent analysis from the Trades Union Congress (TUC) with a slightly cynical mind set. This is not say I don’t respect the work they do, just that I am always wary of analysis by those with an apparently vested interest.

However, it seems as though the TUC could have a point.

Britain’s economy is still smaller than it was in 2010 on a per person basis and looks set to take up to another five years to regain its pre-credit crunch size.

GDP per capita was £5932 in Q1 2013, a full 7.5% lower than it was in 2007 before the beginning of the credit crunch. Interestingly, the TUC also noted that it was 0.7% lower than when the Conservative/Lib Dem coalition took office in 2010.

Of course, I am sure that those on the opposite side of the political spectrum could quite easily come up with statistics to suit their arguments. However, it is clear that even if there has been a recovery of sorts, it is not exactly a swashbuckling, all-encompassing economic surge. Thus far, it has been little more than a whimper.

So, this strong dosage of economic reality has made me think about turning to a yield play with great defensive qualities: SSE (LSE: SSE).

Obviously, its yield is a major attraction. Shares currently yield an impressive 5.4% and, what’s more, dividend per share growth is set to at least match RPI inflation for the foreseeable future. For income seeking investors who are frustrated by low bank savings account rates and the constant threat of inflation, this is very welcome.

Furthermore, SSE is a defensive share, with a low beta and is often viewed as a ‘safer stock’, which — in times of uncertainty — can sometimes increase in price as demand for such safer stocks increases.

Then there is the current price-to-earnings (P/E) ratio of 13.3. This is lower than the FTSE 100, which has a P/E of 14.9, and the utilities industry group, which has a P/E of 14.7.

Of course, you may already hold SSE or be looking for other potential yield plays. If you are, I would recommend you take a look at this exclusive report that details The Motley Fool’s Top Income Share.

It is completely free and without obligation to view the report and it could be just what your portfolio needs. Click here to take a look.

> Peter does not own shares in SSE.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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