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How low will SSE's dividend cover go?

The energy group has outlined flagging trading in its retail and wholesale business ahead of its full-year results
May 12, 2016

For investors in high-yielding SSE (SSE), the dividend payout will arguably be the most closely watched metric when the energy provider reveals its results next week. Management has already outlined expectations of adjusted EPS of between 117p and 119p for the year, and a dividend increase at least equal to inflation based on the retail prices index.

IC TIP: Hold at 1513p

As for the dividend cover, management have guided a range of 1.2 times to 1.4 times until FY2018. The company has previously flagged a continuation of the decline in energy supply customers, meaning a likely fall in profits for the retail business. In wholesale, increased output in renewables is offsetting a reduction in gas production earnings.