A Comprehensive Review of Upcoming Dividends, Historical Payments, and Financial Health
National Grid PLC (NGG, Financial) recently announced a dividend of $2.49 per share, payable on 2024-07-19, with the ex-dividend date set for 2024-06-07. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into National Grid PLC's dividend performance and assess its sustainability.
What Does National Grid PLC Do?
National Grid owns and operates the electric transmission system in England and Wales. It sold the bulk of its UK gas transmission business in fiscal 2023 to fund the acquisition of PPL's UK power distribution assets. In the Northeastern United States, it serves electricity and gas customers combined in three states. It also owns regulated transmission and electricity generation in the United States, metering services, merchant transmission lines in the UK, and the Grain (UK) liquefied natural gas facility.
A Glimpse at National Grid PLC's Dividend History
National Grid PLC has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down National Grid PLC's Dividend Yield and Growth
As of today, National Grid PLC currently has a 12-month trailing dividend yield of 6.01% and a 12-month forward dividend yield of 6.26%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, National Grid PLC's annual dividend growth rate was 5.20%. Extended to a five-year horizon, this rate decreased to 3.60% per year. And over the past decade, National Grid PLC's annual dividends per share growth rate stands at 1.80%.
Based on National Grid PLC's dividend yield and five-year growth rate, the 5-year yield on cost of National Grid PLC stock as of today is approximately 7.17%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, National Grid PLC's dividend payout ratio is 1.03, which may suggest that the company's dividend may not be sustainable.
National Grid PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks National Grid PLC's profitability 7 out of 10 as of 2024-03-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. National Grid PLC's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and National Grid PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. National Grid PLC's revenue has increased by approximately 11.50% per year on average, a rate that outperforms approximately 62.17% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, National Grid PLC's earnings increased by approximately 8.90% per year on average, a rate that outperforms approximately 55.58% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.60%, which outperforms approximately 47.88% of global competitors.
Next Steps
Considering National Grid PLC's consistent dividend payments, its growth in dividend rates, and its strong payout ratio and profitability, the company presents a compelling case for investors seeking stable dividend income. However, the slightly high payout ratio warrants cautious optimism, suggesting that investors should keep an eye on the company's future earnings reports and any potential strategic adjustments. For further detailed analysis and more dividend stock options, GuruFocus Premium users can explore using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
