National Grid plc (NGG): A U.K. Dividend Aristocrat for 2024?

National Grid plc (NGG) is a prominent player in the U.K. utilities sector, transmitting and distributing electricity and gas across the country. As an investor, you might be wondering if NGG qualifies as a U.K. Dividend Aristocrat for 2024. In this article, we will explore NGG's dividend history, growth, and payout ratio to determine if it meets the criteria for a dividend aristocrat.

Dividend History and Growth

National Grid plc has a rich history of paying dividends to its shareholders. The company has consistently increased its dividend over the past decade, with a few exceptions. Here's a breakdown of NGG's dividend history and growth:

* 2006: 26.1p
* 2007: 28.7p (10.0% increase)
* 2008: 33.0p (15.0% increase)
* 2009: 35.64p (8.0% increase)
* 2010: 38.49p (8.0% increase)
* 2011: 36.37p (-5.5% decrease)
* 2012: 39.28p (8.0% increase)
* 2013: 40.85p (4.0% increase)
* 2014: 42.03p (2.9% increase)
* 2015: 42.87p (2.0% increase)
* 2016: 43.34p (1.1% increase)
* 2017: 44.27p (2.1% increase)
* 2018: 45.93p (3.7% increase)
* 2019: 47.34p (3.1% increase)
* 2020: 48.57p (2.6% increase)
* 2021: 49.16p (1.2% increase)
* 2022: 50.97p (3.7% increase)
* 2023: 55.44p (8.8% increase)
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As we can see, NGG's dividend growth has been relatively stable, with most years experiencing an increase. However, there have been a few years with a decrease in dividends, such as in 2011. Overall, NGG's dividend growth rate has been lower than the average U.K. Dividend Aristocrat, with a 3-year CAGR of -6.83% and a 5-year CAGR of 0%.

Dividend Payout Ratio

National Grid plc's dividend payout ratio is 75.02%, which is higher than its 3-year average of 47.35% and the industry median of 63.85%. This indicates that NGG is distributing a larger portion of its earnings as dividends compared to its historical average and industry peers. However, it's important to note that the payout ratio can vary over time, and a high payout ratio does not necessarily mean that the dividend is unsustainable.

Dividend Yield

NGG's dividend yield is 5.92% as of December 27, 2024, which is higher than the average dividend yield of the FTSE 100 index (4.5%). NGG's dividend yield is also higher than that of other U.K. utilities, such as SSE plc (5.2%) and Centrica plc (6.5%).

Conclusion: National Grid plc (NGG) as a U.K. Dividend Aristocrat

Based on the provided information, National Grid plc (NGG) has a mixed track record as a U.K. Dividend Aristocrat. While the company has a history of paying and increasing dividends, its dividend growth rate has been lower than the average U.K. Dividend Aristocrat. Additionally, NGG's dividend payout ratio is higher than its historical average and the industry median, indicating that the company is distributing a larger portion of its earnings as dividends.

However, NGG's dividend yield is attractive, with a current yield of 5.92% that is higher than the average yield of the FTSE 100 index and other U.K. utilities. This makes NGG an attractive option for income-oriented investors.

In conclusion, National Grid plc (NGG) may not be the most consistent U.K. Dividend Aristocrat, but its attractive dividend yield and history of paying dividends make it a compelling choice for investors seeking income and long-term growth. As always, it's essential to conduct thorough research and consider your investment goals and risk tolerance before making any investment decisions.