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National Grid - A medium/long term good buy?

Wider investment strategy discussions not dealt with elsewhere
StepOne
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Re: National Grid - A medium/long term good buy?

#112745

Postby StepOne » January 23rd, 2018, 10:30 am

Bouleversee wrote:I have a modest holding but don't feel tempted to add more while the price continues to fall..


So you would add if it got more expensive? :?

StepOne

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

#112749

Postby FredBloggs » January 23rd, 2018, 10:43 am

StepOne wrote:
Bouleversee wrote:I have a modest holding but don't feel tempted to add more while the price continues to fall..


So you would add if it got more expensive? :?

StepOne

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

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

#112779

Postby Bouleversee » January 23rd, 2018, 12:09 pm

FredBloggs wrote:
StepOne wrote:
Bouleversee wrote:I have a modest holding but don't feel tempted to add more while the price continues to fall..


So you would add if it got more expensive? :? "


Not necessariily but you only know when the bottom has been reached when there has been a bit of a recovery and even then you can't be sure it will last, but imo and from my experience I'd rather buy at that stage than when it's still falling.

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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

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

#112885

Postby FredBloggs » January 23rd, 2018, 9:25 pm

vrdiver wrote:
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...

Excellent and sage advice. Indeed for a holding NG I am not looking for a short term exit (a good job too,) . I admit I can be a trigger happy at times buying a bargain. I will indeed keep my wallet in my pocket for now. Thanks :!:

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

#113395

Postby FredBloggs » January 26th, 2018, 8:21 am

Very nice to see a bounce in NG stock this morning. Time to pull the trigger on a top up, maybe :?:

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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?

Bouleversee
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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.

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

#113426

Postby FredBloggs » January 26th, 2018, 10:34 am

vrdiver wrote: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?

Thank you for being a somewhat restraining force on my too itchy click finger :lol: Not so much a bounce as a bit of bump which is now subsiding, the bounce may well be of the dead cat variety :!:

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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").

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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!)

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

#116254

Postby FredBloggs » February 7th, 2018, 7:52 am

onslow wrote: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!)

The gas asset proceeds were returned to share holders already IIRC. If we say the typical yield from a stock like NG is around 4.5%-ish then it is a sound buy at these levels?

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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?

#116257

Postby FredBloggs » February 7th, 2018, 8:05 am

onslow wrote: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!

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.

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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.

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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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