National Grid plc isn’t the only dividend king I’d buy today

Royston Wild explains why National Grid plc (LON: NG) isn’t the only dividend dynamo that could make you incredibly rich.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

For those seeking reliable earnings and dividend growth in turbulent times, it’s hard to look past National Grid (LSE: NG).

It goes without saying that electricity is one of those commodities that we Britons cannot go without, regardless of whether or not the domestic economy is failing or thriving. So with GDP growth starting to stutter (this rung in at a pretty-insipid 0.4% for the third quarter), and the never-ending Brexit saga threatening keep economic expansion reined in many years yet, now could prove a sage time to plough into the utilities space.

The likes of Centrica and SSE face an uncertain future, however, as the embattled Conservative government, eager to re-seize the initiative from the Labour opposition, vows to implement price caps on Britain’s leading power suppliers.

National Grid is insulated from the worst of these troubles, however, given that it does not sell electricity to hard-hit consumers, but simply keeps the electricity grid up and running. And therefore its profits outlook is that much more stable.

Power up your investment returns

Such earnings visibility is of course essential to keep dividends on an upward slant and has given National Grid the confidence to keep raising payouts at a pretty decent lick.

And thanks to the stable operating environment, the City is certainly expecting rewards at the London-based business to keep sprinting higher. The 44.27p per share dividend shelled out in the year to March 2017 is anticipated to rise to 45.3p in the current period, and again to 46.8p next year.

As a consequence, yields for fiscal 2018 and 2019 rock up at a terrific 4.9% and 5.1%, respectively.

Make the connection

My bullish assessment of big-yielder Connect Group (LSE: CNCT) has also improved immensely in recent days following the release of full-year financials. And so has that of the broader market.

The distribution giant has seen its share value explode 25% since Thursday’s update, share pickers piling in after it said heavy restructuring measures would drive it back into earnings growth from this year.

While market conditions remain difficult at the business (revenues and adjusted pre-tax profits dropped 3.1% and 2.8% correspondingly in the 12 months to August 2017, it advised this week), Connect has now embarked on a two-year transformation drive which will encompass the “comprehensive integration of our core businesses, extending from leadership and central services through to the network and frontline delivery.” Its decision to focus on Early Distribution and Mixed Freight divisions should create a leaner and more effective earnings generator in the years ahead.

Connect kept its record of handsome dividend growth rolling by electing to lift the shareholder reward to 9.8p per share for fiscal 2017, from 9.5p in the previous year. But brokers are predicting that the dividend will shrink in the current fiscal period, to 9.7p per share.

However, this figure still yields a formidable 8.6%. And I believe payout projections could be on the end of meaty upgrades in the months ahead, should restructuring measures begin to bear fruit. Indeed, the number crunchers are expecting earnings to move 7% higher in the current year alone.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Would a stock market crash matter?

Christopher Ruane explains why a stock market crash could turn out to be positive, not negative, for a private investor…

Read more »

Investing Articles

Has the Rolls-Royce share price peaked?

After a strong 2023 performance and (so far) in 2024, the Rolls-Royce share price has stuttered in recent days. Christopher…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Turning a £20k ISA into a £13,900 yearly second income? It’s possible!

By investing a £20k ISA now using certain basic principles, our writer thinks he could set up a second income…

Read more »

Fans of Warren Buffett taking his photo
Investing Articles

With no savings, I’d follow Warren Buffett’s number one rule to build wealth

Can this one piece of Warren Buffett wisdom really help our writer as he aims to build wealth in the…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

A second income of £1k a month from just £10 a day! How would I do that?

Mark David Hartley considers how to build a second income stream starting from just £10 a day. Is £1,000 a…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Turn £8,900 into a £24k annual passive income? Here’s how!

Christopher Ruane applies some investing lessons from billionaire Warren Buffett when explaining how he'd aim to earn sizeable passive income…

Read more »

Young Caucasian woman holding up four fingers
Investing Articles

7%+ dividend yields! 4 FTSE 100 shares for investors to consider buying in April

These FTSE shares offer dividend yields comfortably above the index average of 3.7%. Here's why they could be good passive…

Read more »

Dividend Shares

£10k in an ISA? Here’s how to generate a ton of passive income

Passive income can provide a lot more financial freedom and security. Here’s an easy way to generate some within an…

Read more »