If you’re looking to quit the rat race and retire early, I think the National Grid (LSE: NG) share price can help you get there.
Indeed, shares in the company have several unique qualities. These imply that this investment could give you significantly higher total returns than many of its blue-chip peers.
National Grid share price: unique qualities
National Grid is responsible for managing the vast majority of the electricity network in England. This makes the business a unique enterprise, and it is unlikely to face any significant competition any time soon.
Recreating the company’s network of infrastructure assets, which has been developed over many decades, would cost tens of billions of pounds. What’s more, it’s highly unlikely the government would give the green light to any competitor entering the sector.
This is a highly regulated and controlled business that’s critical to national security.
As such, it’s highly unlikely the utility provider will ever be dethroned from its position at the top of the UK utility industry. That may mean that the National Grid share price has exceptional long-term investment qualities.
At the same time, the organisation has a growing presence in the United States. This business is less secure, and there is more competition. Still, the company’s experience and size in the UK give it a great base to grow off.
Management is focusing on the company’s growth efforts on the US market and plans to expand its presence substantially over the coming years.
In the group’s most recent financial year (2020) it invested £3.2bn in its US business, up from £2.7bn in 2019. That’s compared to just £1bn of investment for the UK electricity transmission business.
Overall, National Grid invested £5.4bn in its most recently completed financial year, growing the overall value of capital assets by 9% year-on-year.
Another business in National Grid’s portfolio is its property development enterprise. Management has partnered with St William Homes to make the most of its underutilised land. Last year the business completed and sold 370 homes, yielding an overall net profit for the firm.
All of the above suggests that the National Grid share price has highly defensive qualities. The company also has an impressive track record of returning all excess profits to investors with dividends. At present, the stock supports a dividend yield of 5%. That’s around 1% higher than the rest of the FTSE 100.
The kind of stable returns that National Grid share price could provide investors in the years ahead may mean that it is the perfect stock to add to your retirement portfolio.
Like many businesses, the company is suffering short-term uncertainty due to the coronavirus crisis. However, the long-term nature of the utility business suggests that the National Grid share price should provide attractive total returns for investors over the next few decades as the business remains a critical part of the UK economy.
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Rupert Hargreaves owns no share 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.