The Motley Fool

1 FTSE 100 dividend stock to buy today

A person holding onto a fan of twenty pound notes
Image source: Getty Images.

Last year, many companies stopped paying dividends as the pandemic brought the global economic machinery to a halt. Not all of them, though. The FTSE 100 energy utility National Grid (LSE: NG) continued to be a source of passive income. 

Healthy dividends and capital growth too

And these were not trivial dividends either. Over the past five years, the company’s dividend yield has averaged 5.2%. Right now the average FTSE 100 yield, which is the dividend payout expressed as a percentage of the share price, is 3.7%. This means that buying the company’s share is going to earn me around 150 basis points higher return than in the average index stock. The company also has a policy to increase its dividends in line with consumer price inflation, so that the real returns to shareholders remain unchanged. Of course, dividends are never guaranteed.

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...

Additionally, investors who bought the stock last year have seen some capital gains as well. From this time last year to now, its price has risen some 12%. While this is a smaller increase than that for many other FTSE 100 stocks, it does offer stable dividends. And for long-term investors, National Grid has been even more rewarding in terms of capital gains. Its share price has risen more than 56% over the past 10 years.

Eye to the future 

Further, I like that it is preparing itself for the future of energy. As the world tilts towards cleaner energy sources, the company is also streamlining its business to reflect these priorities. As my colleague Rupert Hargreaves recently pointed out, it is selling off its stake in the UK’s gas pipeline network. While gas is a cleaner fuel than other fossil fuels, like coal, it is still polluting, so renewable energy is preferable. National Grid is concentrating its attention on electricity instead. It has bought Western Power Distribution, which is the UK’s biggest electricity distribution network. 

The downside to the FTSE 100 stock

The company is not without its challenges, however. While on the face of it, its numbers for the financial year ending 31 March looked healthy, the underlying figures were not so positive. This can be seen as a one-off because of Covid-19. As The Guardian pointed out in this report, as the pandemic happened its costs rose, revenues fell, and there was an increase in the number of households in the US that were able to pay their bills. All these factors likely affected full-year numbers too. 

My takeaway

Ideally, I would like to see some recovery in its next set of numbers, since it would cover the economic recovery from the pandemic. A delay would be disappointing, though, because it is less easy to justify a planned increase in dividends for a company whose profits are falling. 

That said, I reckon that in time things should look better for National Grid. And given its dividend history, passive income from it looks far more stable than that for a number of other FTSE 100 stocks. It is a dividend stock I’d like to buy. 

Our 5 Top Shares for the New “Green Industrial Revolution"

It was released in November 2020, and make no mistake:

It’s happening.

The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

…That’s just here in Britain over the next 10 years.

Worldwide, the Green Industrial Revolution could be worth TRILLIONS.

It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!

Access this special "Green Industrial Revolution" presentation now

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended National Grid. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. 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 click below to discover how you can take advantage of this.