Interactive Investor

ii view: National Grid raises dividend but shares weaken

18th May 2023 15:53

by Keith Bowman from interactive investor

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Delivering energy in both the UK and the US, investing in clean energy infrastructure, and offering an attractive dividend yield. Buy, sell, or hold?


Full-year results to 31 March

  • Underlying or adjusted operating profit up 15% to £4.58 billion
  • Final dividend of 37.6p per share
  • Total full-year dividend up 8.77% to 55.44p per share
  • Net debt of £41 billion, down from £42.8 billion 

Chief executive John Pettigrew said:

“This has been another year of significant progress and strategic change for National Grid with good results demonstrating excellent execution against our key priorities.”

ii round-up:

UK and US utility company National Grid (LSE:NG.) today detailed full-year profits broadly in line with City hopes, but flagged its expectation for earnings over the year ahead to decline marginally given recent UK tax changes. 

Adjusted profits for the year to the end of March rose 15% to £4.58 billion, helped by the inclusion of its previous takeover of the UK’s biggest electricity distribution business. That's helped fund an 8.8% increase in the annual dividend to 55.44p. 

Shares in the FTSE 100 utility giant fell by more than 2% in UK trading having come into this latest news up by around 14% year-to-date. That’s similar to fellow utility major SSE (LSE:SSE) and ahead of a near 3% rise for the FTSE 100 index itself. 

National Grid owns the high-voltage electricity transmission network across England and Wales, connecting millions of people to the energy they use. In the US, and unlike in the UK, its businesses supply gas and electricity directly to customers. 

During the year it invested a record £7.7 billion in building clean, smart energy infrastructure and maintaining reliability across its networks. 

Industry regulator Ofgem recently awarded it 17 major transmission projects to enable increased levels of offshore wind connection in the UK. 

A mix of good US operational performance, increased property sales and a further £236 million of operating cost savings helped lift adjusted earnings by 7% year-over-year to 69.7p per share. 

A change by the UK government to its capital allowance regime from 1 April 2023 is expected to shave 6-7p off earnings per share for the current year to end of March 2024.  

The group’s AGM is scheduled for 10 July. 

ii view:

National Grid operates primarily in the transmission and distribution of electricity and gas in the UK and the US. Its divisions include UK Electricity, UK Distribution, US New England and New York businesses and NG Ventures managing a portfolio of low carbon and renewable energy businesses, including electricity interconnectors, LNG, battery storage, wind and solar power. 

For investors, negotiations with UK and US regulators are a mainstay and regularly offer uncertainty.
Changes to taxes and capital allowances can impact. Group net debt of over £40 billion following its previous purchase of Western Power Distribution (WPD) in the UK now stands almost equal with its stock market value, while the pandemic previously hindered performance as businesses closed or used less energy.

On the upside, and given a degree of predictability for energy usage, National Grid can offer five-year financial plans which few other companies can. Climate change and exposure to clean energy have also become central to its strategy, while efforts to reduce costs continue to be made. 

On balance, and given the group’s broadly defensive offering and historic and forecast dividend yield of over 4.5%, National Grid shares look to remain deserving of  place in diversified portfolios. 


  • Attractive dividend payment (not guaranteed)
  • Geographical diversity


  • Net debt of over £40 billion following its previous WPD buy
  • Subject to currency movements

The average rating of stock market analysts:

Strong hold

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