The Motley Fool

3 Numbers To Consider Before Buying National Grid plc

There are always lots of numbers to evaluate when deciding whether or not to buy a particular share.

Today I’m going to quickly look at three numbers that anyone thinking about investing in National Grid (LSE: NG) (NYSE: NGG.US) might want to consider.

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...

5.5%

That’s National Grid’s currently percentage yield.  It’s close to double the FTSE 100 average, and is much more than you’d get from a savings account.

For many income-seeking investors, this yeild may be reason enough to buy shares in National Grid (so long, of course, that they’re happy the company is fundamentally sound).

Better still, the yield is effectively index-linked. Under its new dividend policy, which came into force on April 1st , National Grid “will aim to grow the ordinary dividend at least in line with the rate of RPI inflation each year for the foreseeable future“. And that’s no joke, despite the date it commenced.

8

That’s how many years National Grid’s new price-controls arrangements for its regulated UK assets will run. After more than three years of negotiations, National Grid announced at the end of February that it had agreed to Ofgem’s proposals, and the new arrangements came into force on 1 April.

Price controls may seem like bad news, because they set a limit on how much money the company can make from much of its business.  However, they also provide a great deal of stability. As National Grid chief executive Steve Holliday said, when the agreement with Ofgem was announced:

These arrangements give our UK businesses their longest ever period of regulatory clarity. This enables us to focus on driving efficiency across our operations while building the infrastructure that the country needs and at the same time realise the benefits of excellent performance for both customers and investors.

It’s no coincidence that National Grid’s new inflation-linking dividend policy came into effect on the same date as the new price control arrangements.

3,900,000,000

That’s how many pounds sterling National Grid might spend in the UK in 2013/14, as part of its long-term plan to significantly expand its regulated asset base.

It’ll also be spending between £1.3bn and £1.4bn in the US, to upgrade existing infrastructure there. The group’s spending is in line with its stated aim of “growing regulated assets by around 6% per annum over the next few years”.

Investment in the UK will include major activities such as the London Power Tunnels project — a seven-year plan to rewire the capital via deep underground tunnels — and further planning for the western High Voltage Direct Current (HVDC) link with Scotland.

Such projects are vital to the company’s long-term revenue generation — partly because it needs to be able to meet future demand, but also because it needs to ensure that its assets function as efficiently as possible.

What next?

National Grid is actually one of the companies featured in the Motley Fool special report, “5 Shares To Retire On“, along with four other quality companies for the long-term — companies that have an outstanding record of providing reliable shareholder returns.

If you want to know which other top-quality share selections our team of expert analysts here at the Motley Fool have picked, you should get hold of your FREE copy now.

> Jon owns shares in National Grid.

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...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Our 6 'Best Buys Now' Shares

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

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.