Looking back at the dividends I received in March, SSE PLC (LON: SSE) (LSE: SSE.L) is near the top of the list. Sure, I hold a decent amount of it and it’s probably in my top 20 (or even top 10) holdings, but still the income from it should be useful in going towards a new holding (or topping up an existing one) in my portfolio.
That’s the great thing about dividends, you don’t have to work for them. You buy the shares and they just roll in a couple of times a year. If, like me, you don’t make withdrawals from your portfolio then they can be reinvested. Otherwise, they can be spent on cars, houses or whatever else the investor wants!
For me, buying SSE has been a good investment thus far. Clearly, it’s never going to be a stock which provides me with huge capital gains, but with a 6% or so yield, I don’t need big capital gains to justify it being in my portfolio. Even a few per cent per year would be enough to keep me happy and with the magical impact of compounding, that can really add up.
Further, SSE also offers my portfolio a degree of resilience in time of difficulty. For example, with the European Referendum a matter of weeks away, I’m expecting the stock market to become rather choppy. But with SSE having a beta of just 0.8, it should provide a degree of stability during volatile periods for the wider market.
Additionally, I like SSE’s status as a defensive stock for many investors. Although there are no hard and fast rules regarding what constitutes a defensive stock, SSE has historically been seen as a safer place to invest than a number of its UK-listed peers. This means that it could be seen as a safe haven of sorts during a period of uncertainty, which given the volatility of the last six months or so, has been most welcome in my portfolio.
And of course, as a big fan of dividends, SSE’s track record of raising dividends by 2.2% during the last three years gives me confidence that future rises could beat inflation – particularly with it standing at just 0.5% at the moment.
The author owns shares in SSE at the time of writing.