RE: We are having shares taken away!24 Apr 2017 19:56
Hi OHSES,
Demand for what National Grid does is not going to go away. As the owner and operator of essential electricity and gas infrastructure across the UK and north east of the United States, its role is vital in keeping the lights switched on and homes and businesses heated.
National Grid's markets are tightly regulated and it has a natural monopoly. Each year it is required to invest billions on maintaining and upgrading its infrastructure. In return, it is entitled to earn a reasonable profit, with the potential to earn more if it exceeds regulatory targets. This business model results in highly predictable revenues and low borrowing costs, both of which underpin the group's ability to pay regular dividends.
The group's aim is to grow the full year dividend by at least the rate of RPI inflation each year. Over the last decade, dividends per share have grown at a compound annual rate of 6.5% per annum. But, with RPI inflation currently running at just 2% (September 2016), future dividend growth is likely to be lower, at least in the short term. The shares currently offer a prospective yield of 4.5%.
National Grid's defensive qualities and healthy yield are a clear attraction in the current environment, with interest rates not anticipated to rise for the foreseeable future. The shares now trade on a price to earnings ratio (P/E) of around 14.7x, compared with a long run average of nearer 13x.
As i said previously National Grid is still (and always will be) a very sound company, I have held NG long term and have "topped-up" on a number of occasions. IMO the sp will get stronger and I fully expect the dividend to continue.
There is really no comparison with Vodafone.
Certainly no worries.
ATB
DAR-
Sign In
Follow the stocks
