National Grid - A medium/long term good buy?

[Alaric]

No. It is the realisation in government that they have a monopoly on their hands.

If I remember the nationalised structure correctly, there was an integrated generation and distribution corporation, the CEGB (Central Electricity Generating Board). When privatised, the generation side of it was split at least three ways, "National Power", "International Power" and the nuclear stations. The distribution side at the high power level remained as a monopoly. Later it also took over gas distribution ("Lattice") which was spun off from the entrails of British Gas around the time that was split into BG and Centica. There was some other complication that initially at least, the distribution part of CEGB was owned wholly or partly by the newly privatised regional distribution companies and then spun off as another share offer.

It shouldn't be news that National Grid holds a monopoly within the UK. It always has done.

[dspp]

What I picked up was that it is the NG monopoly on the control of the UK high voltage grid that is the issue. Not the grid itself, but the control of. Then there was a realisation that the two could, in principle, be decoupled. Then there was the realisation that the one other organisation that might be technically capable of, and commercially able to bid (by virtue of its control function up north) was SSE. Things may have moved on since I picked up this snippet. I fully agree this is not a new situation. It has both technical integrity (obvious) and commercial integrity (e.g. gaming) aspects to it as a motivator. I hold both SSE and NG by the way and am not particularly concerned re either holding. This is a very minor ripple indicative of a bigger game that is being played out. I happen to think both companies are well placed and well managed.

regards, dspp

[tjh290633]

Later it also took over gas distribution ("Lattice") which was spun off from the entrails of British Gas around the time that was split into BG and Centica.

In point of fact, Centrica was split off on 17 Feb 1997, while Lattice was split off on 20 Oct 2000, over three years later. The merger of LAT with NGG came two years later, on 21 Oct 2002, to form National Grid Transco (NGT).

TJH

[Urbandreamer]

What I picked up was that it is the NG monopoly on the control of the UK high voltage grid that is the issue. Not the grid itself, but the control of., dspp

Not the UK. NG only has control of the England and Wales part.

[dspp]

What I picked up was that it is the NG monopoly on the control of the UK high voltage grid that is the issue. Not the grid itself, but the control of., dspp

Not the UK. NG only has control of the England and Wales part.

Thank you. That's my point. SSE does up north, hence being a viable contender.

regards, dspp

[Bouleversee]

The price of both NG and SSE has come down a fair bit in the past year. Does that make them a buy or a sell?

[Darka]

Does that make them a buy or a sell?

That depends on whether you think the share price will increase/decrease from now and lots of other questions that pretty much no-one can answer, but I believe they will continue to do well.

I won't be selling and indeed have topped up today, I'm sitting on a capital gain of 13.7% and have received dividends worth 23.7% of my purchase costs, so I'm happy with them (so far anyway).

I'm talking about National Grid by the way... I don't hold SSE.

regards,
Darka

[Bouleversee]

Does that make them a buy or a sell?

That depends on whether you think the share price will increase/decrease from now and lots of other questions that pretty much no-one can answer, but I believe they will continue to do well.

I won't be selling and indeed have topped up today, I'm sitting on a capital gain of 13.7% and have received dividends worth 23.7% of my purchase costs, so I'm happy with them (so far anyway).

I'm talking about National Grid by the way... I don't hold SSE.

regards,
Darka

Over what period?

[77ss]

The price of both NG and SSE has come down a fair bit in the past year. Does that make them a buy or a sell?

Who knows!

I hold both. Overweight in SSE, and if the share price perks up a bit, I shall top-slice - banking the 6.5% yield in the mean time. My first HYP purchase, back in 2002, and a lucky one.

NG, bought in 2006, hasn't done quite so well, but an XIRR of 12% is very satisfactory. OTBE, I intend to top-up next month, with accumulated dividends.

One point to bear in mind is that NG intends to sell a further 14% (£0.8bn) of its UK Gas Distribution business in 2019. I don't know what that will translate to by way of any return of capital, but I shall only buy in a tax shelter - just in case.

[Bouleversee]

SSE was one of my husband's largest holdings but the s.p. has fallen about £2 since he died last November which is annoying as I have to sell to pay my children's legacy. I had thought of telling them to reinvest the money in their ISAs (different broker), rather than hang on to them as executor and hope for a recovery, but maybe it's past its prime and there are better options, possibly a global investment trust.

[spiderbill]

The price of both NG and SSE has come down a fair bit in the past year. Does that make them a buy or a sell?

NG's price "drop" is complicated by a sizable return of capital in back in mid-summer along with a consolidation. Even without counting the capital return I'm slightly up on all my purchases of it except one, and the dividend has been solidly around 4.2-4.7% from memory. If all of my shares had performed likewise I'd be a very happy bunny! Seems to me to be one of the most solid HYP shares around and only the fact that it's the 3rd largest in my portfolio is stopping me buying some more. Has the advantages of a utility without the political interference that some others are subject to.

SSE is (IMHO) a much riskier bet. I bought a small amount in 2013 and shortly after Milliband made a speech about energy prices and it fell sharply. It's still down 7% on capital. I was persuaded on these boards to buy some more in February this year and it promptly fell again (political mutterings again from what I remember) and that batch is now 9% down. The dividend is good but I have some doubts about the sustainability given they are losing customers pretty continuously due to price hikes. The only other good thing is they aren't Centrica! (bought at the same time as the first batch and now 50% down.) You might be lucky and buy into a recovery but I won't be risking it.

Spiderbill

[Bouleversee]

Yes, I remembered about the NG consolidation and payout as soon as I'd posted. Am inclined to agree with you about SSE. Don't mention Centrica; I share even more pain Do you ever wonder why you bother? I think I might give Vanguard Life Strategy 80 a whirl.

[baldchap]

SSE is (IMHO) a much riskier bet. I bought a small amount in 2013 and shortly after Milliband made a speech about energy prices and it fell sharply. It's still down 7% on capital. I was persuaded on these boards to buy some more in February this year and it promptly fell again (political mutterings again from what I remember) and that batch is now 9% down. The dividend is good but I have some doubts about the sustainability given they are losing customers pretty continuously due to price hikes. The only other good thing is they aren't Centrica! (bought at the same time as the first batch and now 50% down.) You might be lucky and buy into a recovery but I won't be risking it.

SSE may be losing retail customers, but ultimately I think that part of the business is no more than 25%. The rest is from generation etc, and they will be supplying that electricity regardless of which suppliers name is on your electricity bill.
As for Centrica, with over 40% of profit now coming from outside the UK, I will buy all day long at less than 220p.
Don't be persuaded by anything you read here though.

[spiderbill]

Yes, I remembered about the NG consolidation and payout as soon as I'd posted. Am inclined to agree with you about SSE. Don't mention Centrica; I share even more pain Do you ever wonder why you bother? I think I might give Vanguard Life Strategy 80 a whirl.

Consider Centrica the madman in the attic - never to be spoken of again!

I do sometimes wonder if I'm on the right path when I see supposedly solid shares like IMB and GSK dropping in value and the likes of Marston and GNK floundering - let alone car crashes like Carillion. Thanks heavens for insurers at the moment! I did recently branch out into ETFs with some VWRL, just to get a bit of balance. I'm afraid we live in "interesting times"!

cheers
Spiderbill

[TahiPanasDua]

UK utilities started to drop in value when Labour published it's manifesto threatening to nationalize rail and other utilities last November. Corbyn has mentioned NG by name as a candidate. The exception is Centrica which was already a bit of a basket case. I think institutional investors are being cautious until the current political mess starts to resolve. Good luck with that!

NG has about 40% of it's assets in North America so limiting capital losses to some extent.

I have mentioned this theory in the past so apologies for repetition.

The way Theresa and her so-called colleagues are going, the chances of a hard left government are high. It could be sooner rather than later. Nobody can say. You may feel that the risk of holding is worth taking but I would caution against topping up.

TP2.

[88V8]

We hold Centrica, NG, UU, SSE.
If Comrade Corbyn and his fellow travellers get in, there must be a risk if not of confiscation, oops I mean nationalisation, then of interference in dividend levels.
After all, he will have to implement at least some of his policies to placate his horde of young idealistic supporters, and one only has to look at the Utilities' price drop yesterday during his speech to see that the market has concerns.

Unfortunately this means that we face four years or so of political uncertainty in an important investment sector, and in the meantime the Govt may feel obliged to implement interfering policies of its own. All this is very annoying. As a rule when investing one can ignore political risk as being too unknowable, but not here, not now.

Like TPZ, I will probably hold but not so sure about topping up.

V8

[AleisterCrowley]

It might.... then again it might not.
Almost bought yesterday during HSDL cheap dealing but got dragged into a meeting

[vrdiver]

Anyone think NG will hit 900p? I am getting very close to pressing the buy button on NG here, but 900p would be perfect.

Why does this remind me of "VOD for a £1"?

[vrdiver]

Anyone think NG will hit 900p? I am getting very close to pressing the buy button on NG here, but 900p would be perfect.

Why does this remind me of "VOD for a £1"?

Perhaps because nobody HAS to use VOD. But anyone, anywhere in the UK, NEEDS NG every time they switch their bedside light on, make a cup of tea or watch Corrie. There is no alternative to using NG in your life 24x7 unless you return to the stone age. And regarding VOD, you need NG everytime single time you make a call or charge your smartphone too.

The reference was about the price dropping to £9, not the utility itself. An old running joke from the old gaff....

[GoSeigen]

Can anyone explain why this is NOT a falling knife? Looks like one for writing options against IMO. [Then you probably can buy them for 900p]

GS