The Motley Fool

National Grid is a FTSE 100 dividend stock I’d buy with £1,000 today

Image source: Getty Images.

The performance of National Grid (LSE: NG) in recent months has been somewhat surprising. It has declined by around 12% since May, while the FTSE 100 has fallen by around 14% over the same time period. While it has outperformed the index, its defensive credentials would normally be expected to appeal to investors during a challenging period for the index.

Yet investors appear to be uncertain about the company’s prospects. As such, it may now offer a margin of safety versus a number of its index peers. This could make it worth a closer look alongside another company that released an update on Friday and which has experienced a declining share price in recent months.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Improving outlook

The company in question is speciality pharmaceuticals business Circassia (LSE: CIR). It released a trading update for the 2018 financial year which showed that it has enjoyed success in implementing its cost containment strategy.

Net cash outflow for the year is expected to be less than £20m, with sales due to be between £48m and £52m. This follows higher Tudorza rebates in federal channels in the second half of 2018, as well as a delay in revenue recognition in China as a result of the establishment of a local subsidiary.

Circassia expects to report significant sales growth in 2019. The establishment of a direct sales operation in China could catalyse its financial performance, while it aims to launch COPD (chronic obstructive pulmonary disorder) treatment Duaklir should approval be granted in the US. While the company is expected to remain loss-making in 2019, improving financial performance could help it to reverse a share price decline of 47% in the last year.

Defensive appeal

While National Grid has thus far not proven popular at a time when the FTSE 100 has experienced a period of decline, the stock could become increasingly appealing to a range of investors. The general trend among investors in recent months has been towards increased risk aversion, and this could continue in the coming months. The prospect of a global trade war, Brexit, slowing growth in China and rising US interest rates may contribute to a desire among investors for less risky assets.

With National Grid having a business model that is less closely correlated to the wider economy than the vast majority of its FTSE 100 peers, it may be able to deliver reliable dividend growth over the medium term. It already has a dividend yield of 6%, which is historically high for the stock. And with its earnings forecasts being relatively robust and dividend growth expected to match inflation over the next few years, its income appeal appears to be high.

Certainly, the wider utility sector faces a period of regulatory change which could impact negatively upon dividend growth in the long run. But with risks facing the world economy being high today, National Grid could become an increasingly popular share during the course of 2019 in my opinion.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens owns shares of NATIONAL GRID PLC ORD 12 204/473P. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.