The National Grid (LSE: NG) share price is hardly the most exciting blue-chip stock. However, it’s one of the most predictable operations in the FTSE 100. I think this predictability is one of the company’s most attractive qualities.
Today, I’m going to explain why I reckon this can help you get rich and retire early.
Slow and steady
The National Grid manages the bulk of England’s electricity distribution network. The company is highly regulated and owns a portfolio of valuable assets, which are crucial for the UK’s national security and energy independence.
What’s more, replicating this network would be virtually impossible. It would cost hundreds of billions of pounds and require years of legal wrangling.
As a result, the company has a considerable competitive advantage. This makes the National Grid share price highly attractive, in my opinion. The unique nature of the group’s operations means that it’s unlikely to face any significant competition. That makes the firm’s bottom line relatively predictable.
At the same time, the organisation is investing in its US network. This is the growth part of the business. National Grid already controls most of the UK distribution market, which limits the group’s potential for growth. On the other side of the Atlantic, however, the company’s growth is just getting started.
Management is investing billions in the US to grow its presence in the market. The investment should help the company’s bottom line to continue to expand for the foreseeable future.
Time to buy the National Grid share price?
All of the above suggests the National Grid share price can produce steady, growing returns for investors over the long term. As such, I reckon the stock could be a great addition to any retirement portfolio.
The best retirement investments are those which investors can buy and forget. There are only a handful of companies I’d trust to look after my money on a multi-decade horizon. The National Grid share price is one of those.
The company’s competitive advantages should protect its income stream and dividend to investors. At current prices, the stock supports a dividend yield of 5.4%, that’s extremely attractive in the current interest rate environment.
Even if the stock doesn’t produce any capital returns over the next decade, thanks to the power of compound interest, this dividend yield could help you build your financial nest egg.
According to my figures, an initial investment of £10,000 with subsequent monthly investments of £200 would be worth £426,000 after 40 years. That’s assuming an average annual interest rate of 5.4% and the reinvestment of all dividends.
Based on these figures, I reckon the National Grid share price can help you get rich and retire early. Therefore, it could be worth including the stock in a diversified retirement portfolio today.
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Rupert Hargreaves 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.