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Stock of the week: National Grid

Written by:
Helal Miah, investment research analyst at The Share Centre, picks power and gas distributor National Grid as stock of the week.

Only a matter of days ago, National Grid confirmed that Britain had gone a full 24-hour cycle without using coal to produce any of the country’s electricity. Commenting on the shift in energy reliant, the company said that it is adapting its “system operation to embrace these changes.”

In April, the British company reported that earnings per share will be 5p more than forecasted as a result of higher electricity and gas volumes. Encouragingly, the firm is increasing its expansion across the US as it focuses on improving the return on its operations in this region. Income seeking investors should appreciate that National Grid provides an attractive dividend yield of 4.2% which is expected to grow at least in line with inflation.

We have long been fans of the group for income seekers and though the share price came under pressure in the latter part of 2016 the shares have recovered to above pre-Brexit levels. We therefore continue with our ‘buy’ recommendation for lower risk income seeking investors.

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