National Grid says it can link dividend to inflation
National Grid promised investors today that its dividend would rise at least in line with inflation every year — just months after it complained that the industry’s new regulatory regime was riddled with “numerous errors” meaning it could not adequately invest in new infrastructure.
The country’s biggest energy distributor sees a new regime from industry watchdog Ofgem come into force on 1 April, covering the next eight years. Ofgem sets revenues for almost two-thirds of National Grid’s business, and forced it to cut almost £5 billion from its £33.5 billion spending plans. The company then claimed the plans lacked “the essential investments to provide safe, reliable networks”.
City analysts had warned that its dividend could be sliced as a result, but today National Grid’s chief executive Steve Holliday said it could afford the dividends “while enabling the group to sustain the strong balance sheet needed to fund the business.”
He added: “The board is confident that growth in assets, earnings and cash flows, supported by improving cash efficiency and an exposure to attractive regulatory markets should help the group to maintain strong, stable credit ratings and a consistent prudent level of gearing, while delivering attractive returns for shareholders.”
One City analyst said: “There was a lot of noise at the time, but National Grid wouldn’t have accepted the deal if it didn’t think it could grow the dividend. It has a lot of work on its hands — the investment is the equivalent of building two Olympics — and wants to reward investors.”
The shares rose 11.3p to 762p.
- 1 What happens to your body when you give up sugar?
- 2 Tourist films plane's descent just metres above packed Caribbean beach
- 3 World Book Day: Boy 'excluded' from school after dressing up as Fifty Shades' Christian Grey
- 4 Have sex with your iPad thanks to the new sex toy no-one asked for
- 5 GamerGate: developer Tim Schafer provokes rage with joke about online gaming activists at industry awards
Harrison Ford plane crash: Actor will make full recovery thanks to 'beautifully executed' landing
Tourist films plane's descent just metres above packed Caribbean beach
Oxford whistleblower's attempt to protect young victim of a sadistic gang went unheeded
How Homer Simpson discovered the Higgs boson over a decade before scientists
The 'sex selfie stick' lets you FaceTime the inside of a vagina
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Elif Shafak: Turkish author warns against rise of British nationalism
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
iJobs Money & Business
£13000 per annum: Recruitment Genius: This is an exciting opportunity to join ...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...