United Utilities Plc (UU.) - Half-year Report.

[idpickering]

Dividend;

The interim dividend of 16.59 pence per ordinary share (year ended 31 March 2023: interim dividend of 15.17 pence per ordinary share, final dividend of 30.34 pence per ordinary share) is expected to be paid on 1 February 2024 to shareholders on the register at the close of business on 22 December 2023. The ex-dividend date for the interim dividend is 21 December 2023.

https://www.investegate.co.uk/announcem ... rt/7884363

Also posted on Company News here; viewtopic.php?p=627904#p627904

I hold these in my HYP and know others hereabouts do too, so this may be of interest here.

Ian.

[daveh]

I used to hold UU and PNN as water companies in my income portfolio. I sold all of PNN and half of UU earlier in the year as I was worried about debt levels and political interference with all the hoo haa about pumping raw sewage illegally into our rivers. You can guess what has happened since. PNN is up 20% since I sold and UU 9%. I used the cash raised to top up GSF, BLND and WDS. All should increase income going forward compared to PNN and UU, but the price performance of the replacements has been poorer with WDS down 11%; GSF up 4% and BLND up a reasonable 13% .

[kempiejon]

I used to hold UU and PNN as water companies in my income portfolio. I sold all of PNN and half of UU earlier in the year as I was worried about debt levels and political interference with all the hoo haa about pumping raw sewage illegally into our rivers. You can guess what has happened since. PNN is up 20% since I sold and UU 9%. I used the cash raised to top up GSF, BLND and WDS. All should increase income going forward compared to PNN and UU, but the price performance of the replacements has been poorer with WDS down 11%; GSF up 4% and BLND up a reasonable 13% .

Ah ha, that's why I like the LTBH strategy. No risk I'll sell something based on fear or chatter just before it starts improving to buy something with the receipts that then stumbles. Sill have both those examples in my HYP recently Pennon has rebased and returned some of my capital which UU did over a decade back.
Anecdotally, I remember reading a white paper about the debt in UU 15 odd years ago, following privatisation all the utilities were loading up with debt - the mood music said rewarding fat cats owners, pushing UK business profits overseas and rewarding shareholders while not investing in infrastructure leading to system decline leaks etc. Who'd have thought.

[moorfield]

The Times has a good analysis of UUs dividend today.


https://www.thetimes.co.uk/article/unit ... -b2gxd2qpr

That means the company will be distributing about £113 million to shareholders despite its profits after tax coming in at £90 million, a differential of 25 per cent or a payout of £5 for every £4 earned. Last year when United Utilities’ accounts were ravaged by rising costs and interest rates, the company paid out an interim dividend of 15.17p or a total of £103 million despite making a loss of £12 million.

The dividends of regulated regional water monopolies have become increasingly contentious when customers see rising bills and booming executive pay but high levels of leakage and pollution across the privatised industry after decades of underinvestment.

Not sustainable, surely.

[Itsallaguess]

Not sustainable, surely.

Agreed.

I'm not quite sure why an income-investor would look to expose themselves to a company with underlying earnings per-share of 13.2p, that pays out an interim dividend raised by 10% of 16.59p.

Whilst net debt rises 9.1% from £7.83Bn to £8.54Bn.

With a yield of around 4.4%, and with figures like that which are likely to attract all the wrong attention for anyone looking to kick water companies at some future point in time, then I'm happy to have sold out of them in February of this year.

A readable link to the Times article here - https://archive.is/vnZIu

The United Utilities yield simply doesn't justify the risk in my view.

Cheers,

Itsallaguess

[monabri]

There's so many things wrong with UU and the other water companies on a financial level and how they operate. Debt is keeping operations afloat like the t*rds too frequently allowed into the water courses. It's all been said before on the discussions on water companies.

[daveh]

There's so many things wrong with UU and the other water companies on a financial level and how they operate. Debt is keeping operations afloat like the t*rds too frequently allowed into the water courses. It's all been said before on the discussions on water companies.

Its why I sold PNN and half of UU. earlier this year, PNN in September and half UU. in July. PNN is up ~20% since and UU ~9%. Debt wise UU. is one of the best of the water companies with the lowest debt ratio (if I recall correctly) and PNN one of the worst. I'm guessing the rise in prices is that with inflation coming down the markets are expecting interest rates to have peaked and that they will possibly start to fall next year and this has improved the companies debt position going forward. That might also explain why PNN has improved more as its debt is a bigger problem.

One reason to like the water companies is that most have a policy of increasing dividends by inflation over each 5 year regulatory period, but there is a strong possibility that they may re-base the dividend at the start of the next regulatory period to match their expected income and increased expenditure on required infrastructure upgrades.

Maybe I'm talking myself into selling the rest of my UU. holding!

[moorfield]

Ah ha, that's why I like the LTBH strategy. No risk I'll sell something based on fear or chatter just before it starts improving to buy something with the receipts that then stumbles. Sill have both those examples in my HYP recently Pennon has rebased and returned some of my capital which UU did over a decade back.

That said it's worth noting UU is one of the six founding members of HYP1 that endure (nearly) a quarter century ( ) later. So it's already survived one labour government, banking crisis, austerity, low interest rates, high interest rates, low inflation, high inflation etc. etc. Maybe pyad was onto something with Strategic Ignorance after all ...?