Utility stocks are supposed to be among the safest, dullest and most reliable income investments around. But the threat of Labour nationalisation, regulatory pressures and a smattering of dividend cuts has made investors rightfully wary.
Let's start with a look at how the three biggest utility companies in the FTSE 100 have performed over the last five years:
|Company||5yr share price change||5yr dividend change|
|National Grid (NG)||-5%||+10%|
|SSE (SSE)||-20%||+12% (but a cut of c.20% is planned for 2019/20)|
It's not a pretty picture. But the clear winner, with a stable share price and no dividend cut, is National Grid (NG). This isn't by chance. The group's business model is fundamentally different to that of UK rivals meaning it could be a long-term winner in the sector.
There are two main reasons why this £29bn firm is…