The FTSE 100 is packed stuffed with prime revenue shares and I’m wanting so as to add a pair extra to my portfolio.

I’ve a diffusion of dividend shares, together with Lloyds Banking Group, Authorized & Basic Group and M&G. Clearly, I’m too closely concentrated within the monetary sector and have to unfold my wings. So I made a decision to dimension up a few utilities as an alternative.

United Utilities Group (LSE: UU) jumped out at me. As a regulated water utility firm, United Utilities has predictable earnings as a consequence of constant demand for water companies. This could assist fund a secure but rising stream of second revenue.

Ought to I purchase?

The inventory at present yields a thirst-quenching 4.87%. Final Wednesday (29 January), the board introduced plans to extend dividend funds in keeping with inflation over the following 5 years. That will give me a hedge in opposition to rising residing prices. Any share price development could be on prime.

Regulator Ofwat permitted the dividend hike however this really triggered a credit standing downgrade by Moody’s to Baa2/Secure. This might elevate borrowing prices.

That’s a fear on condition that United Utilities is investing £13bn between now and 2030 to wash rivers and improve infrastructure, in what CEO Louise Beardmore referred to as “the largest investment in water and wastewater infrastructure in over 100 years”.

Privatised utilities are controversial proper now. United Utilities has been attacked by clear water campaigners over sewage discharges into Windermere within the Lake District. It’s additionally drawn hearth for mountaineering family payments 32% over 5 years beginning April.

With the United Utilities share price down 4% over one yr and flat over 5, I can’t work up a lot enthusiasm. Particularly given its price-to-earnings (P/E) valuation of greater than 30. That’s double the FTSE 100 common. Time to deploy my bargepole.

It’s some time since I checked out renewables-focused energy large SSE (LSE: SSE). So is that this extra tempting? I keep in mind when the inventory routinely paid revenue of round 6% so was stunned to see the trailing yield down to three.7%.

The SSE dividend was lower final yr

Then I remembered SSE rebased its full-year dividend per share for 2023/24 to 60p final Might. That was down from 96.7p the earlier yr, a 38% drop.

The board’s planning beneficiant focused will increase of between 5% and 10% a yr to 2026/27. It says this “aligns future dividends with SSE’s ambitious growth profile”, however I’m unsure that aligns with my very own revenue wants. The SSE share price is down 3% over the past yr. Over 5, it’s up a modest 8%, plus dividends.

The rebasing was designed to maintain shareholder payouts inexpensive whereas SSE pumps cash into infrastructure. Its transmissions enterprise now plans to spend nearly £32bn by 2031 to attach offshore wind farms to the ability grid.

On 20 January, Citi warned that SSE additionally wants to deal with its long-term funding construction and warned “the lack of immediate action given the pending change of management and ongoing RIIO ET3 review is unlikely to delivery this clarity”.

SSE doesn’t seize me both. Regardless that its shares look significantly better worth than United Utilities, with a P/E of simply over 10 occasions. Fortunately, I’ve nonetheless acquired my bargepole useful.