National Grid shares are my top FTSE 100 dividend buy right now

first_img The Motley Fool UK’s Top Income Stock… See all posts by Alan Oscroft Image source: Getty Images. Alan Oscroft | Thursday, 20th May, 2021 | More on: NG I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Simply click below to discover how you can take advantage of this. Enter Your Email Address Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.center_img Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Which is the best FTSE 100 stock for dividends? Banks have been popular. But we had a financial crisis that wiped out dividends, and then the Covid-19 pandemic did it again. Energy producers have a dividend tradition too. But with green pressure increasingly bearing on them, even BP has done the unthinkable and rebased its dividends. But National Grid shares have just carried on yielding the cash.Full-year results were out Thursday, and there’s been no change to the trend. The dividend for the 2020-21 year was only lifted 1.2%. But the 49.16p per share represents a yield of 5.2% on the current share price.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The figures were respectable, if not exciting. Statutory results showed increases across the board, but we saw small falls in underlying figures. Operating profit dropped 3%, with earnings per share down 7%. Capital investment dropped a little too, by 7%, but still exceeded £5bn.Decent results in tough timesFor the year we’ve just had, I’m happy with these results. Chief executive John Pettigrew said that National Grid’s performance during such a tough time is “testament to the strength and resilience of our business model.” The company reiterated its policy of providing long-term asset and dividend growth.The main reason I’ve always liked National Grid shares is that it never matters which oil company provides the oil or gas, or which energy retailer sells it to the end customer. It has to go through the distribution networks.Energy restructuringNational Grid does run the gas distribution network, and that’s still carrying fossil fuel. On that front, the company intends to sell off a majority stake in its gas transmission division. The latest updates confirm that should be completed during the 2022-23 year.The acquisition of Western Power Distribution shows that the company is serious about a refocus on electricity distribution. But it does mean we’re looking at a slimmer organisation, and increased capital expenditure as the firm makes the transition. Might that put pressure on those precious dividends?The uncertainty shows in the performance of National Grid shares. They’re doing fine in 2021, slightly behind the FTSE 100. But over five years, they have declined 12.5%. Still, even at its lowest point in the past 12 months, the share price was still healthily above its weaker 2018 levels. So there looks to me some support among investors now.National Grid shares valuationBased on the latest underlying EPS figure, National Grid shares are on a P/E of approximately 17. That could look a bit high considering the energy sector risks. But it could be seen as low for a reliable dividend stock yielding better than 5%. So where’s the dividend likely to go?We have some guidance for the five-year period of 2020-21 to 2025-26. National Grid expects to see a compound annual growth rate (CAGR) in assets of 6%-8%. It reckons that should feed through to an earnings per share CAGR of 5%-7%. I think that’s probably enough to keep the dividend safe. National Grid is on my buy list for 2021. We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign.But with this opportunity it could get even better.Still only 55 years old, he sees the chance for a new “Uber-style” technology.And this is not a tiny tech startup full of empty promises.This extraordinary company is already one of the largest in its industry.Last year, revenues hit a whopping £1.132 billion.The board recently announced a 10% dividend hike.And it has been a superb Motley Fool income pick for 9 years running!But even so, we believe there could still be huge upside ahead.Clearly, this company’s founder and CEO agrees. National Grid shares are my top FTSE 100 dividend buy right now Learn how you can grab this ‘Top Income Stock’ Report nowlast_img read more