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National Grid - A medium/long term good buy?

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vrdiver
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Re: National Grid - A medium/long term good buy?

#112781

Postby vrdiver » January 23rd, 2018, 12:24 pm

FredBloggs wrote:With 800p in sight my wallet is twitching. The yield must be > 6% now, at a guess?


Fred, you bought in mid-November at 890p. The market continues to worry over NG and, as you say, 800p is in sight.

Rather than jump in again, only to watch it drift to say, 700p, why not keep a close eye and wait for signs of a market change in attitude and a turn in the price? You will almost definitely miss the absolute lowest entry point, but then that's true of the 890p entry as well, so I'm assuming you're not bothered by trying to time the market - just want a good entry point...

supremetwo
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Re: National Grid - A medium/long term good buy?

#112789

Postby supremetwo » January 23rd, 2018, 12:52 pm

FredBloggs wrote:NG must have the most secure income of just about anyone I can think of except the government.

Not in the USA if huge amounts of capital have to be spent on storm-proofing?

http://www.telegraph.co.uk/business/201 ... blackouts/

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Re: National Grid - A medium/long term good buy?

#112849

Postby tjh290633 » January 23rd, 2018, 6:25 pm

FredBloggs wrote:With 800p in sight my wallet is twitching. The yield must be > 6% now, at a guess?

5.4% at tonight's close.

TJH

vrdiver
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Re: National Grid - A medium/long term good buy?

#113420

Postby vrdiver » January 26th, 2018, 10:03 am

Who knows?

Me personally, I'd keep watching - the "bounce" is hardly a "trend" yet!

(But from a HYP perspective, if you are satisfied with the metrics, the time to buy is "now", so it wouldn't be a wrong choice - it's just that personally I see a consistent downward trend in the price graph, which makes me think Mr Market is rerating this share based on something that wasn't in an RNS: political risk maybe? If that's true then I'd just keep watching until NG finds its new level.)

A tough choice: what else is competing for your cash?

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Re: National Grid - A medium/long term good buy?

#113425

Postby Bouleversee » January 26th, 2018, 10:32 am

fwiw (from ADVFN's morning markets bulleting)

"On the broker note front, Goldman Sachs made some changes to its stance on utility and water stocks, upgrading National Grid to ‘neutral’ and initiated coverage of Severn Trent, United Utilities and Pennon at ‘sell’ and ‘neutral’, respectively."

Not madly encouraging.

vrdiver
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Re: National Grid - A medium/long term good buy?

#113437

Postby vrdiver » January 26th, 2018, 11:14 am

FredBloggs wrote:Thank you for being a somewhat restraining force on my too itchy click finger

I won't take the thanks, 'cos I don't want the blame either :lol:

I just took a look at Director deals and noticed a fairly consistent selling-off back in June/July, but not much in the way of significant buying by the directors since then. If the share price was undervalued, or the directors had great confidence that the price was a temporary blip, where are their purchases?

(and no, director sales/buys on their own don't mean anything, but it's just another crumb of "evidence" to add to your "smell test").

onslow
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Re: National Grid - A medium/long term good buy?

#116253

Postby onslow » February 7th, 2018, 7:40 am

National Grid nearly yielding 6% based on a DPS of 44.5p.

And, a director last week bought £350K of shares at 805p.

The question is - where are interest rates heading? If you continue to think up then stocks like NG will continue to be unattractive compared to other places to put your money.

If you think the higher inflation/interest rates are now factored in then, at current levels, NG looks to be a good buy at these levels.

(although not sure if NG will lower the DPS after selling off their Gas distribution business - something to check before buying!)

onslow
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Re: National Grid - A medium/long term good buy?

#116256

Postby onslow » February 7th, 2018, 7:59 am

Hi Fred - yes, my thinking is NG will have less profit going forward as they have sold off some of the business.

The proceeds from the selling of the Gas business was returned a few months ago, however there must be a "loss" of ongoing profit too which may impact the dividend. I'll need to look into this.

However generally agree, NG at this yield is rare!

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Re: National Grid - A medium/long term good buy?

#116273

Postby vrdiver » February 7th, 2018, 9:30 am

FredBloggs wrote:IIRC, the number of shares in issue was reduced too? So the yield per share should be comparable? Apologies if I'm missing something here.

Yes, there was an 11 for 12 share consolidation in May 2017.
Dividends before the consolidation were 28.34p and 15.17p, afterwards were 29.1p and 15.49p respectively.

VRD

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Re: National Grid - A medium/long term good buy?

#116279

Postby kempiejon » February 7th, 2018, 9:47 am

Here's a handy list and chart of dividends, https://www.dividenddata.co.uk/dividend ... py?epic=NG.

onslow
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Re: National Grid - A medium/long term good buy?

#118126

Postby onslow » February 14th, 2018, 12:26 pm

Some good points above, I forgot about the recent share consolidation.

FWIW I bought more today at 738. Just over 6% yield. Nothing is a sure thing, but NG with such a stable business paying 6% is close enough!

The recent falls have likely been a combination of concerns around 1) rising interest rates, and 2) Jeremy Corbyn.

Re 1 ) Rising interest rates obviously a concern given the large debt loads of utilities. However rates will only rise if inflation rises, and if so, NG can raise prices. They have committed to raising their dividend by RPI

Re 2) Even if Labour get in, and JC becomes PM I doubt there is majority support within his own party to nationalise the utilities. The Tories will of course be against, there a still large numbers of "moderate" Labour MPs who are unlikely to vote so I think the risk is very much overstated.

Yes, some of the more moderate Labour MPs could be de-selected before the next election however most of them would just stand as independents, so it wont help JC get his more socialist policies though Parliament. Let alone the Lords!

I think its more likely of more regulation against the Big 6 consumer facing companies, from both the Tories and Labour. However, given NG is not consumer facing I doubt there will be any significant pressure on NG, and nobody will doubt the importance of the national grid and want to put it at risk. Just my opinion of course!

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Re: National Grid - A medium/long term good buy?

#118142

Postby hiriskpaul » February 14th, 2018, 12:59 pm

onslow wrote:Some good points above, I forgot about the recent share consolidation.

FWIW I bought more today at 738. Just over 6% yield. Nothing is a sure thing, but NG with such a stable business paying 6% is close enough!

The recent falls have likely been a combination of concerns around 1) rising interest rates, and 2) Jeremy Corbyn.

Re 1 ) Rising interest rates obviously a concern given the large debt loads of utilities. However rates will only rise if inflation rises, and if so, NG can raise prices. They have committed to raising their dividend by RPI

Re 2) Even if Labour get in, and JC becomes PM I doubt there is majority support within his own party to nationalise the utilities. The Tories will of course be against, there a still large numbers of "moderate" Labour MPs who are unlikely to vote so I think the risk is very much overstated.

Yes, some of the more moderate Labour MPs could be de-selected before the next election however most of them would just stand as independents, so it wont help JC get his more socialist policies though Parliament. Let alone the Lords!

I think its more likely of more regulation against the Big 6 consumer facing companies, from both the Tories and Labour. However, given NG is not consumer facing I doubt there will be any significant pressure on NG, and nobody will doubt the importance of the national grid and want to put it at risk. Just my opinion of course!

Not sure you are right about cost of debt only rising if inflation does, although I know NG do have a reasonable amount of RPI linked debt. I think it likely that long dated yields will rise as central banks move from being buyers to sellers. Nevertheless, I am warming to the idea of NG being a reasonable long term investment, considering the 6% yield AND the aim of raising the dividend in line with inflation. If a JC government causes chaos, that commitment may prove difficult to achieve, but like you I think the chances of renationalisation are remote. Even if the dividend was re-set to 3%, rising with RPI, that would still be a decent return for the long term risk IMHO.

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Re: National Grid - A medium/long term good buy?

#118153

Postby youfoolishboy » February 14th, 2018, 1:33 pm

I sold out of NG a couple of weeks ago due to the political risk and protect profits. I am glad I did I see it as a near certainty it will be nationalised if Labour get in and I believe Labour are going to get in even if it means with the SNP as a coalition partner in the event of a hung parliament. The method of nationalisation has already been aired it is by giving bonds to the shareholders. This will cost the government nothing effectively as the profits from the nationalised industries will effectively pay the interest on them, yes I know it will only take a few years and they will be running at a loss but not many people can remember what a nationalised industry is like in the UK. The debt adds to the National debt but since when has a Labour government worried about increasing the National debt? Every Labour government I have seen have done that the last one called it ‘borrowing to invest’ I am pretty sure the next lot will try and tell us the same. The fall at NG is also exuberated by the warning of higher interest rates this will take away from its, and the utilities sector, bond like reasons for holding. Having said all that I believe we are now at a stage that NG is valued below its American assets so am considering buying back in if it keeps its downward trajectory as the political risk is effectively negated.
DYOR.

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Re: National Grid - A medium/long term good buy?

#118201

Postby onslow » February 14th, 2018, 4:56 pm

" This will cost the government nothing effectively as the profits from the nationalised industries will effectively pay the interest on them, yes I know it will only take a few years and they will be running at a loss"

This is what I dont get - the entire point of their nationalisation policy is to reduce their profits because at the moment they believe the companies are ripping off consumers. If they "stop" this ripoff, then the profits will reduce so they wont be able to pay the interest on the bonds.

I agree, the Lab government will just go into more debt if required, but it puts quite a hole in their argument

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Re: National Grid - A medium/long term good buy?

#118231

Postby hiriskpaul » February 14th, 2018, 6:29 pm

onslow wrote:" This will cost the government nothing effectively as the profits from the nationalised industries will effectively pay the interest on them, yes I know it will only take a few years and they will be running at a loss"

This is what I dont get - the entire point of their nationalisation policy is to reduce their profits because at the moment they believe the companies are ripping off consumers. If they "stop" this ripoff, then the profits will reduce so they wont be able to pay the interest on the bonds.

I agree, the Lab government will just go into more debt if required, but it puts quite a hole in their argument

Labour seems to have missed, or quietly disregarded, the issue of the likely interest cost of the gilts. If the intention is to borrow to spend/invest (choose according to POV!) then gilt auctions will not do terribly well unless there is a hefty risk premium incorporated into the yield. Gilt yields may have already been lifted as well due to perceived risks from a shambolic Brexit* and the BOE trying to dampen inflation by raising interest rates and unwinding QE. I guess one could say that Labour will not care about this and will just tax everyone to oblivion instead, but I suspect in the cool light of day they will likely say something along the lines of "I know it was a manifesto commitment, but that was made before we realised the seriousness of the economic mess we have inherited...".

Granted, nationalisation still a risk, but look at the potential upside on NG if it does not happen, compared to downside from here if it does.

*The gilt market will make up its own mind on the risks of Brexit by the way, regardless of how marvelous anyone thinks it will be to be free of the "Doomed" EU.

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Re: National Grid - A medium/long term good buy?

#120615

Postby dspp » February 26th, 2018, 7:48 pm

For those with an interest on the UK regulatory electrical grid machinations in the background that I suspect are intended to create a outcome duopoly vs the existing monopoly in the ESO function. I expect that SSE are the most likely alt-ESO:

Following on from the Open Letter in September 2017 on the development of GB code changes required for legal separation of the Electricity System Operator (ESO) from the Electricity Transmission Owner (ETO) within the National Grid Group, National Grid are holding a conference call to provide an update on the proposed approach for the Industry codes including DCode. If you would like to attend the call can you please register through .... [redacted by me] ...... If you have any questions please email Box.ELSP@nationalgrid.com .

regards, dspp

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Re: National Grid - A medium/long term good buy?

#140518

Postby richfool » May 22nd, 2018, 12:49 pm

Since its cashback to investors in early June last year, the SP of NG has fallen back quite significantly. My holding was down -23% at one point, but I kept faith and liking its US exposure and appreciating that it runs the grid in the UK (as opposed to being an actual supplier) I topped up a couple of times during the last winter. Once in November @ 8.95 which with the benefit of hindsight was a bit too soon, and once more at beginning of April this year @ 8.08. Overall my holding is still down 14% but the outlook for NG seems to be improving, and I note it goes ex dividend on 30th May.

The annual report a few days ago was viewed positively, though the Ofgem probe over electric forecasts announced today may take the edge of that.

From HL website:
In the year to 31 March, National Grid's operating profit fell 8% to £3.5bn as a result of adverse timings and major storms in the US. Excluding these effects, profit was up 6% at constant exchange rates.

The full year dividend rose 3.75% to 45.93p per share. National Grid will continue to target paying dividend increases at or above the rate of RPI inflation.

http://www.hl.co.uk/shares/shares-searc ... 2,-204473p
The electricity regulator is investigating whether National Grid broke rules over its demand forecasting for the UK electricity market.

https://uk.webfg.com/news/news-and-anno ... 05997.html

(Sharecast News) - The electricity regulator is investigating whether National Grid broke rules over its demand forecasting for the UK electricity market.

Ofgem said on Tuesday morning that it was investigating National Grid Electricity Transmission's demand forecasting to determine whether it "breached rules relating to its duty to operate the system in an economic and efficient manner".

http://www.lse.co.uk/sharecast-news-art ... _forecasts

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Re: National Grid - A medium/long term good buy?

#140544

Postby richfool » May 22nd, 2018, 1:58 pm



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