At almost £13 each, are National Grid shares still a bargain for dividend income?

National Grid (LSE: NG.) shares look costlier than they did a 12 months in the past, however that doesn’t imply they’re a unhealthy match for each investor.

The inventory has risen 17.5% previously 12 months and has traded above £10 per share for greater than a 12 months, giving many value-hunters pause.

Dividends stay broadly just like 2022 ranges, so earnings traders aren’t seeing a huge leap in yield. That begs the query: are the shares value shopping for at immediately’s worth?

Why the worth rise?

Loads of the transfer is all the way down to the corporate’s funding story. National Grid’s working what administration describes as a multi‑12 months programme to broaden the community.

Current firm commentary and press protection reference a close to‑time period programme within the area of tens of billions to 2029 and past. That is geared toward almost doubling components of the transmission community to deal with extra energy and new hundreds corresponding to knowledge centres. 

Regulators have additionally put in place the RIIO‑T3 worth management framework that permits increased returns and subsequently increased permitted income for transmission companies.

CEO Zoë Yujnovich not too long ago highlighted ongoing work to broaden electrical energy transmission strains. She mentioned the corporate is addressing £12bn in prices tied to curtailment preparations with wind and photo voltaic builders to handle extra era.

That goes a way to assist clarify why traders are prepared to pay extra. However will it preserve delivering progress?

What the numbers say

Financially, the enterprise seems to be doing effectively. Underlying earnings grew 14.7% final 12 months, and administration steerage factors to earnings progress of between 13% and 15% in 2027.

However with the shares now buying and selling on a worth‑to‑earnings (P/E) ratio of 19.65, they’re increased than the FTSE 100 common.

Dividends-wise, a payout ratio of about 74% helps funds, and the corporate’s 32‑12 months observe report of funds definitely provides belief. Nevertheless, the yield’s close to its lowest ranges in 5 years, at simply 3.8%.

These figures present a regulated utility with regular earnings progress and a lengthy dividend report. However with a valuation increased than lengthy‑run averages, it appears the market’s already pricing in a lot of the expansion. 

What are the dangers?

Giant infrastructure builds not often come with out delays or price strain, and better funding additionally raises leverage by way of regulatory gearing. That may ramp up debt even when the steadiness sheet appears wholesome immediately.

There’s additionally a actual query about whether or not money move absolutely covers each debt servicing and dividends as soon as the heavy capex years hit. Regulated earnings mitigate these dangers to a point, however don’t take away them altogether.

So is it still value contemplating?

For somebody chasing speedy progress, National Grid’s unlikely to thrill in 2026. And for earnings traders searching for excessive yields, 3.8% appears modest relative to different earnings choices.

However for a cautious investor who needs defensive, regulated earnings, it’s still a affordable holding to contemplate. That’s why I intend to maintain holding the shares for years to come back. The regulated mannequin and the corporate’s position within the vitality transition present a robust basis to scale back volatility in a portfolio.

Do you have to make investments £5,000 in National Grid Plc proper now?

When investing knowledgeable Mark Rogers and his group have a inventory tip, it could actually pay to hear. In any case, the flagship Twelfth Magpie Share Advisor e-newsletter he has run for almost a decade has offered hundreds of paying members with prime inventory suggestions from the UK and US markets.

And proper now, Mark thinks there are 6 standout shares that traders ought to take into account shopping for. Need to see if National Grid Plc made the checklist?

Mark Hartley owns shares in National Grid.