The Motley Fool

Red alert! I reckon these FTSE 100 dividend stocks could fall off a cliff in 2019

Image source: Getty Images.

If you’re a FTSE 100 investor then 2019 may well look like a shark tank right now.

There’s a broad blend of problems that could send the index into a tailspin next year, from the impact of a cooling Chinese economy and fresh bouts of trade tensions on the index’s mining giants to rising competition and shredded consumer confidence on the retailers.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

In the current climate you need to be cautious and on your toes. Share markets remain the best place to sink your savings, in my opinion, but there are lots of pitfalls that we as investors need to be aware of. This article looks at some more battered blue-chips that could sink without a trace in 2019.

Going down

2018 proved to be another nightmare for SSE (LSE: SSE), its share price dropping 20% since the turn of January.

But we shouldn’t be surprised at this. The threat posed by the independent suppliers has been there for the best part of a decade, and in that time the so-called Big Six suppliers have gradually seen their customer bases erode. Mounting pressure on household budgets has continued the trend this year and, with the domestic economy flailing, it’s threatening to worsen in 2019.

Reflecting this, as well as the increasingly-hostile regulatory backdrop, SSE planned to merge its retail unit with that of Npower. But those plans began to unravel last month when new Ofgem price caps prompted fresh discussions on the merger, a development that caused the Footsie firm’s share price to sink. The worst was confirmed yesterday, SSE declaring that “it is not now in the best interests of customers, employees or shareholders to proceed with the transaction.” It would now consider a variety of options for its retail business, it said, including a standalone demerger and listing or a possible sale.

Another risky pick

More than half a dozen energy suppliers have gone to the wall this year alone, underlying the difficulties of creating profits in the current climate. So the prospect of SSE remaining saddled with its retail division doesn’t bode well.

This difficult backdrop is also weighing on the outlook for fellow FTSE 100 play Centrica (LSE: CNA), although it share price has fared better than SSE so far this year thanks to the impact of a stronger oil price for its Centrica Energy production arm. It’s down just 1% in the year to date.

However, crude prices have started sinking again amid fresh fears over market oversupply, worries that have pushed Brent back below $60 per barrel and which threaten to spread in 2019 as the global economy loses steam. With this key support strut now looking shaky, Centrica’s share price could find itself getting battered again.

I’m not bothered by their low forward P/E ratios of 13.6 times and 11.3 times respectively, nor their giant dividend yields of 9.2% and 8.8%. For me, SSE and Centrica are in danger of suffering serious and sustained profits falls beyond the drops currently predicted for their current fiscal years. And this would obviously exacerbate concerns over both firms’ already-mountainous debt piles. The risks are rising and I wouldn’t be surprised to see an exodus of investors  in the new year.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Royston Wild 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.