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Over the past five years, integrated energy companies SSE (LSE: SSE) is in transition. But it emerged with a clear ambition to serve the country’s energy needs for now and in the future. And SSE shares are now an opportunity for long-term investors.
The company focuses on regulated electricity grids and renewable energy with flexible generation. And aim for a balanced business model that works “strong” performance, despite volatile market conditions. We’ve had a lot of that lately.
Net zero ambition
The directors considered the company’s offer “important” inflation protection for shareholders. And because of the results index-linked and “limited” index-linked debt. We’ve seen that in action recently.
Indeed, energy prices have been taken higher, increasing revenue. And the cost of borrowing interest is also rising. So it is good that SSE’s exposure to rising interest payable has been brought under control.
The company’s strategy is supported by the net zero acceleration program announced in November 2021. The directors consider that the program represents “optimal route kab“ to consolidate the company’s position as UK “champion of clean energy”.
The aim is for businesses to deliver more than 25% of the UK’s 40 Gigawatt (GW) offshore wind target for 2030. And more than 20% of the country’s electricity grid investment. But SSE also plans to export more of its renewable energy capabilities overseas. So the potential for growth is a big part of the case for investing in stocks now.
Meanwhile, the company has been busy selling non-core operations. And it has bought projects that support its ambitions, such as wind farms. But “partner” with other companies being part of the plan to finance their ambitions as well. And we have also seen it selling minority shares in the project to raise cash for further investment.
Rebased stock dividend
However, this is not the only way the company raises funds. It also rebased lower shareholder dividends for the trading year of March 2024. This idea is for “Supporting significant investment and growth plans in the group”. But the news may not be received by many shareholders who are there to make a profit.
However, even if the road ahead is full of uncertainty for SSE, tilting towards better growth could result in a satisfactory long-term total for shareholders. Although nothing is guaranteed, as with all businesses.
Meanwhile, it is interesting to examine how much a £1,000 investment in SSE shares five years ago is worth today. After all, that period has seen many changes for the business. And again, we were able to pick up some shares at around 1,231p each. So the price is now close to 1,784p representing an increase of 553p per share.
But that’s not all. During the period, dividends totaled 439.5p per share. And it added that it made a profit from the share price at 992.5p per share. So the gain during that period is around 80%. And that means a £1,000 investment five years ago would now be worth around £1,800.
For me, the return is definitely satisfying. And investors may want to research the company’s current prospects going forward.
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