IMF U-Turn Makes Me Want To Stick With SSE PLC

After the IMF back-tracks on its emerging market viewpoint, I’m more bullish on SSE PLC (LON: SSE).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The short-term movements of the stock market have always fascinated me.

For instance, they seem at times to be completely random, with various news items and pieces of data swinging markets in either direction.

One item that often seems to have a substantial impact on the stock market is economic forecasts. Moreover, when such forecasts are changed, it seems to lead to significant gains or losses in indices around the world.

This is exactly what has happened with regards to the IMF standpoint on developed and developing markets. Indeed, it is now being reported that the IMF believes that “momentum is projected to come mainly from advanced economies, where output is expected to accelerate”.

It is further reported that this line was produced in a confidential note for leaders attending the G20 summit and that it urged them to act to mitigate risks from weakness in poorer countries.

Of course, the above are reports and it is not known whether they are facutal or not. However, changes in forecasts and the almost inevitable impact they have upon shares has made me feel like going back to basics and seeking out a defensive, high-yield stock. SSE (LSE: SSE) (NASDAQOTH: SSEZY.US) seems to fit the bill perfectly.

Indeed, with inflation being one of my major concerns at the moment, the 5.4% yield that SSE offers is of great interest. Furthermore, when it is combined with the company’s aim to increase dividends by at least as much as RPI in future, it firmly ticks the ‘income’ box for income-seekers like me.

Of course, there is more to investing that just a good yield. So, going back to the previously mentioned comments on share price volatility, SSE gives me peace of mind to a larger extent than most other stocks.

Indeed, it is not affected so much by IMF reports, emerging market data releases and similar items as many other stocks are because it has a very low beta of 0.65.

Certainly, SSE offers a great yield, a commitment to match dividend growth to RPI in future years as well as defensive qualities. Therefore, it is a stock that I am keeping a close eye on and that remains a sound option with stock markets being close to all-time highs.

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.

> Peter does not own shares in SSE.

More on Investing Articles

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »