National Grid plc (NGG) is a London-based utility company. It owns and operates of regulated electricity and gas infrastructure networks in United Kingdom (Wales and Scotland) and North Eastern United States (upstate New York, NYC, Long Island, Massachusetts, New Hampshire, and Rhode Island). It serves approximately 20 million consumers in the United Kingdom and the United States.
NGG is part of Mergent’s International Dividend Achiever Index and has been paying growing dividends since last 12 years. My objective here is to analyze if NGG continues to be a good dividend growth stock and how it will rate on my scale of risk-to-dividends.
Trend Analysis
Here I am looking at trends for past 9 years of corporation’s revenue and profitability. These parameters should show consistently growth trends. The image below shows the trend charts.
Risk Parameter Calculation
Here I use the corporation’s financial health to assign a risk number for measuring risk-to-dividends. The risk number for risk-to-dividends is 1.57. This is a medium risk category as per my 3-point risk scale.
Quality of Dividends
This section measures the dividend growth rate, duration of growth, consistency over a period of past five years.
Fair Value Calculation
This section determines what price I should pay to buy a given stock
Qualitative Analysis
Conclusion
NGG is an International Dividend Achiever and has been raising dividends for last 13 years. The stocks current risk-to-dividend rating is 1.57 (medium risk). This is a typical utility stock with slow dividend growth. The projected dividend cash flow is 6 times MMA cash flow after 10 years (at price of $40). This analysis shows that NGG continues to be a good stock for potential international dividend growth investment. I will continue to add to existing positions as along as my allocation allows.
Full Disclosure: Long on NGG.
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