National Grid plc ( ) is a London based UK 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 served approximately 20 million consumers in the United Kingdom and the United States.

NGG is an international dividend achiever and has been paying growing dividends for last 12 years. In one of my earlier post, I listed few companies that may have potential for international dividend growth investments. I had shortlisted NGG for more analysis. Keeping with that, my objective here is to analyze if NGG is 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 8 years of corporation’s revenue and profitability. These parameters should show consistently growth trends. The trend charts and data summary are shown in images below.

• Revenue: Growing trends in revenue. The average revenue growth for last 8 years is 21.9% (with 42% standard deviation). Very high volatility. This is because of significant changes in revenue due to acquisitions.
• Cash Flows: In general, an increasing trend for operating cash flow (except a dip in year 2004). The free cash flow as trended lower and is now less than net income. This would be a concern.
• EPS from continuing operations: Consistently growing earnings after 2002.
• Dividends per share: Consistently slow growth in dividends.

NGG: Trends Analysis

NGG: Data Summary

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.