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.
> Peter does not own shares in SSE.