National Grid Offering Promising Dividends
National Grid hasn’t been putting in a strong performance over the last few months - it has lost around 20 percent of its value since May - but it still has a lot to offer investors, and while some are heavily critical of it because a company of its size, in that particular sector, should be stronger, there are mitigating factors that mean it is worth going against the trend and considering holding on for a little while longer.
National Grid has suffered because Theresa May talked about an energy price freeze - now, since it isn’t actually a supplier, it shouldn’t be affected - but there is a growing concern that the market may be moving to stricter regulation in general. Labour’s Jeremy Corbyn is talking of nationalisation for the industry too, and that just adds to the uncertainty.
Last month, National Grid spoke of half-yearly results, and reported good progress towards its main priorities - with operating profits on the increase. It also increased its interim dividend by 2.1 percent, up to 15.49p a share, which is in line with its policies. It has a track record of rewarding investors - doing special dividends, and offering ongoing share buybacks as well. The dividend is currently sitting at 5.2 percent, and dividend cover is 1.3x profit. Earnings per share are expected to increased by five percent in 2018, and three percent the year after that. This isn’t stellar, but it is certainly solid, and good figures for what is essentially a defensive stock.
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