It has been in my income portfolio for many years and has provided a steadily rising dividend which has kept pace with inflation.
I was a little concerned to read this article in the Telegraph which drew attention to some utility companies paying dividends out of borrowings. The managers of Miton UK Value Opportunities looked at these large utility companies and found that 5 out of the 6 had negative cash flows - regarding SSE :
"SSE, formerly known as Scottish & Southern Energy, will have a positive "headline" cash flow of 3.8pc this year, according to analysts' forecasts compiled by Bloomberg. However, it will pay a dividend yield of 5.38pc.
After all costs are taken into account, Ms Hamilton calculated that it would lose cash to the tune of 4.5pc. In other words, it will pay its dividends out of borrowings, rather than from cash generated by the business – as it has since 2008, the managers said".
This started alarm bells ringing and when I had a closer look at the latest accounts, it seems clear the borrowings have steadily risen in recent years and gearing is now over 200%.
The share price has seen a good run in recent months and is up around 10% since the start of 2013.
Given the concerns over gearing and the question mark on dividend sustainability, I decided to let this one go and sold today at 1555p.