Monday 20 June 2011

Portfolio Buy: National Grid (NG.)

In a recent post I described how I was looking to invest our family's annual ISA allowances for income. I am looking for good, sustainable yield with a reasonable level of risk. Given the recent downturn in consumer spending, I am looking for sectors that will have some resilience.

The first buy is  this high-yield dividend share, which will boost our Level 6 investments of our DIY Income Investor Income Pyramid.

According to This is Money: "National Grid runs the electricity wires across Great Britain and Northern Ireland while National Grid Gas, previously known Transco and formerly part of British Gas, runs the UK's gas pipe network. The company also owns generator Niagara Mohawk in the US." The annual report is here.

The current dividend yield is over 6%.

This high-yield dividend share was one of '5 Monster Dividend Shares' recently identified by Cliff d'Arcy of Motley Fool.

Although Natioual Grid scored only a C in Todd Wennings' Dividend Scorecard (published on Motley Fool); he concluded his review as follows: "In all, investors would be wise to monitor National Grid's debt and its free cash flow generation (or lack thereof) in coming years, but the current dividend appears sustainable and its 6.8% prospective yield is nothing to sneeze at."

So this share seems to tick the boxes for yield, sustainable market sector and risk.

For an update on NG (which is doing nicely) see here. And here.

A US perspective

I am not a financial advisor and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.


  1. Which platform did you use to make your ISA investments sir? Sounds like a good buy even the LSE needs power to conduct its business!

  2. Hi
    There was an interesting article in Money Morning (from moneyweek) today questioning whether the dividend for NG is maintainable, considering the OFGEM review due in December.
    Their consensus was not an immediate sell, but there's potentially 'better' div shares around.

    Any thoughts?

  3. Hi Carter

    It is difficult for us mere mortals (i.e. without detailed models of NG's finances) to tell - but Morgan Stanley is still bullish: