UK shares: if I could buy just one FTSE 100 stock, this would be it

Rupert Hargreaves highlights the one FTSE 100 stock he’d buy for income and growth out of all the UK shares on the market today.

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If I had to pick just one FTSE 100 stock to buy out of all the UK shares available to me, I’d acquire SSE (LSE: SSE).

There are a couple of reasons why I’d pick this business over any other. It operates in the relatively stable utility industry, offers investors an attractive level of income, and has the potential to achieve impressive earnings growth over the next decade or so. 

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While other UK shares in the FTSE 100 might make better income or growth investments, I think SSE offers the best of all worlds. That’s why I’d buy the stock over any other today. 

FTSE 100 growth stock

Power generator and network operator SSE fills a vital role in the UK economy. It provides energy to millions of households. Unlike other sectors, this is a very defensive business.

Consumers will always need energy. Demand isn’t subject to fashion trends, and it’s relatively resistant to economic cycles. As such, SSE’s investment plans stretch out over decades. This is good news for investors. There’s a very high chance the company will still be providing energy to customers two decades from now.

Therefore, it’s highly likely the stock will still be throwing off profits for investors in 20 years. This is really the primary reason why I’d buy SSE over other UK shares in the FTSE 100. If I had to own one company for the next two decades, I think there’s a high chance the SSE business will still be here.  

Management is currently future-proofing the enterprise. It wants to triple the company’s renewable energy output by 2030.

To that end, SSE is selling £2bn of non-green assets while searching for new opportunities. It’s submitted a bid to develop Denmark’s largest offshore wind farm and formed an Iberian partnership to develop its renewables expertise overseas. On top of these international efforts, the FTSE 100 company has the largest wind farm pipeline in the UK. 

SSE wants to invest up to £15bn in these growth initiatives over the next few years. As well as this potential for earnings growth, the stock also offers a dividend yield of 5.6%. 

Risks 

While I’d buy SSE for the next two decades, there are some challenges the company may face as we advance. The UK utility sector is highly regulated. If regulators decide to take a hard line with providers, it could impact profits.

Further, SSE is heavily reliant on debt to fund its capital spending plans. It has around £9bn of debt at the moment and may need more to support its large renewables projects. If creditors aren’t cooperative, SSE’s growth plans may fail. To free up cash, the firm may be forced to slash its dividend. 

Even after taking all of these risks and challenges into account, I still think this is one of the best UK shares in the FTSE 100 to buy right now. 

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Rupert Hargreaves has no position in any of the shares mentioned. 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.

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 considered, so you should consider taking independent financial advice.

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