National Grid Dividend History

Based on the National Grid dividend history table below we can show you why from an income investing perspective National Grid is an interesting candidate.

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Latest: Comparing National Grid's dividends with SSE's

National Grid - an example company

Suppose you bought 1000 shares in National Grid during May 1999. The group's share price fluctuated during that month between £4.51 and £4.16 Lets pick a date, say May 17th, when the closing share price was: £4.325 Excluding stockbroker commissions and any taxes, you therefore paid a total of £4,325.

Year ended Interim Final Total Growth %
31 March Dividend Dividend Dividend
2010 13.65 24.84 38.49 8.0%
2009 12.64 23.00 35.64 8.0%
2008 11.70 21.30 33.00 23.1%
2007 10.90 15.90 26.80 1.9%
2006 10.20 15.90 26.30 11.0%
2005 8.50 15.20 23.70 19.8%
2004 7.91 11.87 19.78 15.0%
2003 6,86 10.34 17.20 7.2%
2002 6.46 9.58 16.04 6.4%
2001 6.05 9.03 15.08 8.2%
2000 5.59 8.35 13.94 6.7%
1999 7.82 8.25 13.07 8.3%
1998 5.25 6.82 12.07 8.4%
1997 4.83 6.30 11.13 8.0%
1996 4.45 5.85 10.30 7.3%
1995 9.60 9.1%
1994 8.80 15.8%
1993 7.60

Let's first check the dividend yield for 1999?

You would have received a dividend of almost 13.1 pence per share for 1999. Now, divide your dividend of £0.131 a share by your original purchase price of £4.325 and multiply with 100 and your (prospective) dividend yield at the time amounted to 3 per cent.

Since, according to the National Grid dividend history table, the Group has been paying a dividend consistently for the last eleven years - in fact:

National Grid has increased it's dividend by an average of 10.9 per cent every year!

And what's happened with your dividend pay-out?

Based on the National Grid dividend history table we can calculate that by early 2010, when the final dividend for 2009 was paid, National Grid's dividend pay-out has almost tripled since 1999 to £0.385 per share

What has happened with your annual yield based on your initial purchase price?

You bought National Grid shares in May 1999, paying £4.325 a share. Eleven years later, you’re receiving a total dividend payment amounting to almost £0.385 a share. Again, divide that £0.385 a share by your original purchase price of £4.325 and multiply with 100:

Your effective yield is now 8.9 per cent!

As long as National Grid is able to keep boosting its dividend, and you keep holding the shares, there is no limit to how high your effective yield can go.

And what About National Grid's capital appreciation?

As per the National Grid dividend history table National Grid have increased their dividends each year, however it has also increased in value over time.

Remember 1999, in our example above, we were able to purchase National Grid shares at £4.325

National Grid share price has been a steady riser ever since. However, its rights issue, earlier in 2010, hammered the share price. As a result, during 2010 National Grid's shares have been trading in £4.75 - £6.85 range).

The terms of the rights issue allowed our hypothetical investor to buy 2 new shares for every 5 shares held. The new shares cost £3.35 each. Our investor decided to participate in the rights issue. Based on his/her holding of a 1000 shares he/she would have been credited with 400 new shares (1000 divided by 5 times 2), for a cash outlay of £1,340. As a result, our investor would now own 1400 shares in National Grid.

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National Grid's value hasn’t done much since 1999

Let me summarise this for you:

  • if you had purchased 1000 National Grid's shares over ten years ago, at a cost of £4,325 per share, your overall cost would have been £4,325 (excluding purchase costs)
  • if you had participated in the 2010 rights issue, you would have purchased an additional 400 shares at a total cost of £1,340. You now own 1400 shares National Grid having paid an overall £5,665 for them.
  • having participated in the rights issue in effect has lowered your overall purchase price to almost £4.05 per share (£5,665 divided by 1400)
  • on average National Grid's dividend has risen 10.9 per cent per annum, almost Tripling the dividend amount from almost 13.1 pence in 1999 to £0.385 per share for 2009
  • whilst the share price ‘hasn’t done very much’ trading between £4.75 - £6.85 per share during 2010.

After just ten years of holding your National Grid shareholding of 1400 shares:

  • your shares are now worth approx £5.50 per share
  • your total shareholding is now worth approx £7,700
  • you have received dividends totalling £2,660 –less than a third your overall purchase amount
  • for 2009, you have received an annual gross dividend payment of £0.385 per share, totalling £385
  • providing you with an ‘adjusted’ effective dividend yield of 9.5 per cent.

What else can I say?

From an income perspective, owning shares in a company such as National Grid appears to tick all the boxes for an early retirement investor, in particular as it is expected that in the next two years we will see an ongoing . . . .

Stable Annualised Dividend Growth Rate!

Before we consider the sustainability of National Grid's dividend and its growth prospects, it's a good idea to first consider what's happened so far.

15-year 10-year 5-year 3-year
Annualised Annualised Annualised Annualised
Growth Rate Growth Rate Growth Rate Growth Rate
9.8% 10.9% 10.4% 13.0%

Over the four periods under consideration National Grid's annualised dividend growth rate has been relatively stable, whereas the last three years the annualised dividend growth rate has in fact accelerated.

We believe that the dividend is unlikely to be cut anytime soon. Barring unforeseen circumstances, dividends for the year ending 31 March 2011 remain on course to the stated target of dividend increases by 8 per cent each year through to 2012.

Taking into account that we need to rebase the dividend going forward, as a result of the rights issue earlier in 2010, we are pencilling in a dividend amount for 2011 of £0.364 per share.

If National Grid continues to increase the dividend payout by (a conservative?) 7.5% each year, your annual yield on investment of 8.9 per cent will grow to 9.57 per cent (£413.77) and the following year to 10.28 per cent (£448), etc.

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1.the above mentioned Dividend History table is solely an example of a UK listed company's dividend history and is not to be construed as a share recommendation. Neither Early Retirement Investor nor EMAR Publishing are registered as an investment advisor or as an independent financial advisor and do not provide individualised advice

2.the price of shares and investments and the income derived from them can go down as well as up, and investors may not get back the amount they invested

3.where the information consists of pricing or performance data, the data contained therein has been obtained from company reports, financial reporting services, periodicals, and other sources believed reliable computations are not guaranteed by Early Retirement or any of the data providers and may not be complete.

5.The editor or contributors may have an interest in the share mentioned.

6.Dividend yields move up and down. As a company’s share price increases the dividend yield falls. And vice versa: if the share price falls the dividend yield increases.

Return to Rising Dividends for announcements from other companies with an amended dividend policy.

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