National Grid Lifts Dividend To Yield 5.9%

Published in Company Comment on 15 November 2012

National Grid (LSE: NG.) raises its first-half payout by 4%.

The shares of National Grid (LSE: NG) (NYSE: NGG.US) slipped 2p to 692p during early London trade today to offer dividend investors a potential 5.9% income.

The FTSE 100 (UKX) member confirmed this morning that its half-year payout had been raised 4% to 14.49p per share. The electricity and gas company also said the payout for the year as a whole ought to be lifted by 4% as well.

The news implied shareholders should expect to receive a current-year dividend of 40.85p per share.

The dividend details came alongside first-half results that showed National Grid's headline profits improve 17% to £1.7 billion. However, adjusted for currency movements, regulatory revenue caps and the costs of storm damage, underlying profits advanced 7% to £1.6 billion.

Steve Holliday, National Grid's chief executive, said:

"I am pleased with the progress we made in the first half of the year: operating our networks safely and reliably and delivering a record level of investment. More recently, our teams in the US responded in a timely, safe and effective way to restore service to our customers and limit disruption caused by 'Superstorm' Sandy."

Mr Holliday claimed the cost of restoring power to the group's US customers following 'Superstorm' Sandy would not exceed £100 million. Such costs will be accounted for within the group's second-half.

Looking ahead, Mr Holliday reckoned National Grid was "well positioned to deliver another year of good operating and financial performance".

Prior to today, City experts were predicting 2012/3 earnings may advance 7% to 55p per share. The projection places National Grid's shares on a possible P/E of 12.5.

But for most investors, it is the aforementioned 5.9% income that is the main attraction to this share.

Indeed, National Grid is just one of a number of FTSE large-caps that currently offers a dividend income well ahead of what you can expect to receive from a standard savings account.

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> Maynard does not own any share mentioned in this article.

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