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National Grid remains a dividend power play

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National Grid has been swept up in the negative sentiment swirling around the UK’s utility sector. But investors hunting for reliable income should remember that the company makes less than half of its operating profits in the UK and hasn’t cut its dividend for 22 years.

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)
Centrica (CNA) -55% -30%


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.

Why National Grid is different

There are two main reasons why this £29bn firm is…

Continue reading this article…

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