It was a fairly uneventful week for the London Stock Exchange, which was closed on Thursday and Friday for the Jubilee holiday. Over five trading sessions since 25 May, the FTSE 100 index is up just over 0.1%. But some Footsie shares did poorly over the past week, with some falling by over 5%.
The FTSE 100’s risers and fallers
Though the FTSE 100 gained slightly over the past week, not all of its constituent shares followed suit. As I’d expect, some shares rose strongly, while others dipped.
Of 100 Footsie shares, 57 rose in value over the last five trading sessions. These gains ranged from just above 0% to 18.1%, with the average gain across all 57 winners being 3%. At the other end of the scale lie 43 FTSE 100 losers. Among these laggards, declines ranged from 0.1% to 11.6%. The average decline across all 43 losers was 2.5%.
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The Footsie’s six biggest fallers
For the record, these are the six biggest fallers over the last five trading days.
| Company | Sector | Share price | One-week loss | 12-month change | Market value | P/E* | Earnings yield | Dividend yield | Dividend cover |
| SSE | Utilities | 1,760.5 | -5.7% | 14.5% | £18.8bn | 7.3 | 13.7% | 4.9% | 2.8 |
| United Utilities Group | Utilities | 1,048.42 | -6.5% | 4.6% | £7.2bn | – | – | 4.2% | – |
| Severn Trent | Utilities | 2,843.63 | -7.8% | 15.2% | £7.1bn | – | – | 3.6% | – |
| National Grid | Utilities | 1,120.44 | -8.6% | 22.6% | £40.9bn | 18.6 | 5.4% | 4.6% | 1.2 |
| B&M European Value Retail | Retail | 383.7 | -9.8% | -28.9% | £3.8bn | 9.1 | 11.0% | 4.3% | 2.5 |
| Harbour Energy | Oil & gas | 380.86 | -11.6% | -6.0% | £3.5bn | 41.3 | 2.4% | 2.2% | 1.1 |
As you can see, these six stocks have declined in value from between 6% and nearly 12% over five trading days. Five of these companies have something in common. Shares in the four utility companies and Harbour Energy were all hit this week by news of a windfall tax on energy firms.
Chancellor Rishi Sunak has decided to raise £5bn through a 25% windfall tax on the excess profits of energy producers, the largest of which are FTSE 100 firms. This levy would be used to reduce energy bills for millions of low-income households. But I’m not convinced of the merits of this temporary tax. After all, income tax was introduced as a temporary measure in 1799 to foot the cost of the Napoleonic Wars!
Which of these Footsie fallers would I buy today?
As a veteran value investor with 35 years of experience, I prefer to invest in boring, safe and solid stocks. What I look for are easily understood businesses with simple business models, cheap shares and decent dividend yields. And looking at the above list of FTSE 100 losers, I spy one share that fits my bill.
I like the look of energy utility SSE (formerly Scottish and Southern Energy), because the company’s shares offer a market-beating dividend yield of 4.9% a year. Even better, this cash yield is covered 2.8 times by SSE’s earnings, underpinning the current payout and offering scope for growth.
Finally, I worry about red-hot inflation, rising interest rates and soaring energy bills right now. But despite these fears, I’d still buy this share today!
