Why I’m bullish on the SSE and Centrica share prices

I’m upbeat about the share price prospects for SSE PLC (LON:SSE) (SSE.L) and Centrica PLC (LON:CNA) (CNA.L)

Centrica PLC
Centrica PLC

SSE PLC (LON:SSE) (SSE.L) has been a stalwart of my portfolio for years. I first bought its shares on 15 January 2014 for a price of 1321p including stamp duty and dealing costs. At the time of writing the SSE share price is 1451p, giving a 9.79% capital gain. However one of the main reasons I bought SSE shares was for the dividend, so all of those dividend payments are added to my profits.

SSE announced results this week and they seem to be positive in my opinion. The full year dividend is up 2.1% to 91.3p and adjusted earnings per share are up 5.2% to 125.7p. Adjusted profit after tax is up 6.1% to £1,268.9 million.

These results encapsulate the reasons why I bought SSE. It has a solid track record of steady dividend growth and consistent profits in my view. Everyone needs gas and electricity after all. Therefore, I think the sector could offer at least some defensive qualities and characteristics over a sustained period of time.

At around these levels I feel it is possible to buy SSE as a long term buy and hold share. I’d like the SSE share price to dip to around 1430p, although given its recent results I would not be surprised if the SSE share price moved higher. I don’t expect strong capital growth, but I do anticipate a solid dividend. The current dividend yield of 6.16% is one of the best I can find among large-cap shares at the moment.

Centrica PLC (LON:CNA) (CNA.L) is another stock I’m optimistic about at current share price levels. At the time of writing the Centrica shares price is trading at 192.7p, and offers a dividend yield of 6.23%. The Centrica PE is also relatively low to my mind, coming in at 11.47. Although the proposed price cap may cause some disruption and uncertainty over the medium term, Centrica has a high degree of brand loyalty as far as I can see, as well as over 1 million Homecare customers.

About Mark Howitt 121 Articles
Mark Howitt is a long-term buy-and-hold investor who has been buying and selling shares for a number of years. He is particularly interested in the banking, energy and telecoms sectors, but also holds stocks in a variety of other industries.