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Stock of the week: United Utilities

Written by:
Ian Forrest, investment research analyst at The Share Centre, picks utilities company United Utilities as stock of the week.

United Utilities, which deals with water, waste water and sewerage, has strong defensive attractions which may appeal to investors. In May, the firm, which supplies around 7 million people and 400,000 businesses, stated that its results were in line with expectations as it reported a 3.1% increase in underlying profit of £622.9m. Furthermore, it confirmed that revenue was slightly lower at £1.7bn whilst it stated the dividend for the year was 38.87 pence.

Interested investors should also appreciate that the company aims to increase the dividend in line with inflation until 2020 although the Labour Party has talked of nationalising the water sector should it come to power in the general election.

Although defensive stocks underperformed in the latter part of 2016, this year United Utilities shares have been trending higher, resulting in an all-time high in May. They have since fallen back and we continue with our ‘Buy’ recommendation for investors seeking a lower risk level.

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