National Grid announces new dividend policy
The Board of National Grid has agreed a new dividend policy to apply from 1st April 2013. The new policy will aim to grow the ordinary dividend at least in line with the rate of RPI inflation each year for the foreseeable future.
In deciding on the new dividend policy, the Board of National Grid considered a number of important factors to stress test the sustainability of the targeted growth rate and the support for strong credit ratings. These included regulatory outcomes in the UK and the US, expectations of delivery under incentive based regimes and sensitivities related to general economic conditions, government policy and other fiscal measures.
Commenting on the new policy Steve Holliday, Chief Executive of National Grid said:
"I am pleased to confirm a new dividend policy which supports our long term ambition to target a secure dividend in real terms for our shareholders while enabling the Group to sustain the strong balance sheet needed to fund the business."
Funding for the growth in the business will be sourced from retained equity and increases in net debt. The Board is confident that growth in assets, earnings and cash flows, supported by improving cash efficiency and an exposure to attractive regulatory markets should help the Group to maintain strong, stable credit ratings and a consistent prudent level of gearing, while delivering attractive returns for shareholders. Any dividend increases above inflation will need to be supported by sustained outperformance and to have no impact on long-term credit ratings.
Under this new policy, from the financial year ending March 2014, and for the foreseeable future, full year dividend growth would be not less than the increase in average RPI for the twelve months to March. For the year ending March 2014 the interim dividend is expected to be 14.49p, thereafter it is intended that the interim dividend be determined as 35% of the previous year's full year dividend. National Grid expects to continue to offer a scrip dividend option.
The final dividend relating to the year 2012/13 is expected to be paid in August 2013 and the Board expects it to reflect the existing 4% growth policy.
