United Utilies Interims

[tjh290633]

Out today, see http://www.investegate.co.uk/united-uti ... 00068845P/

Dividend per share

The Board has declared an interim dividend of 12.95 pence per ordinary share in respect of the six months ended 30 September 2016. This is an increase of 1.1%, compared with the interim dividend relating to last year, in line with the group's dividend policy of targeting a growth rate of at least RPI inflation each year through to 2020. The inflationary increase of 1.1% is based on the RPI element included within the allowed regulated revenue increase for the 2016/17 financial year (i.e. the movement in RPI between November 2014 and November 2015).

The interim dividend is expected to be paid on 1 February 2017 to shareholders on the register at the close of business on 16 December 2016. The ex-dividend date is 15 December 2016.

The price is up over 3% at the moment.

TJH

[Wizard]

Interim dividend up 1.1%, which is of course in excess of most recent RPI of 0.9%. But with RPI anticipated to rise much more quickly soon this is not a great level of growth. I do not think UU. is going to form part of my currently being assembled HYP.

Terry.

[Breelander]

Interim dividend up 1.1%, which is of course in excess of most recent RPI of 0.9%. But with RPI anticipated to rise much more quickly soon this is not a great level of growth...

But "the group's dividend policy of targeting a growth rate of at least RPI inflation each year through to 2020" will ensure future dividend rises will meet any increase in RPI.

The key thing to note is the end-date of the policy - 2020. This current dividend policy was set at the last OFWAT review, at a level calculated to be sustainable for the life of the OFWAT ruling. This has always been the case (for UU and the other water utilities). The net result is that dividends have had a somewhat chequered history, changing with each review period.

I've held UU since 2001. Despite the changing fortunes of the dividend they hold the distinction of being the first of my HYP holdings to have returned to me more than I paid for them.

[HuddersfieldMark]

I still hold UU.

Quick post here to say I'm on Lemon Fool.

[idpickering]

I still hold UU.

Quick post here to say I'm on Lemon Fool.

Good to see you here huddersfieldmark.

Regards ,

Ian

[Arborbridge]

But with RPI anticipated to rise much more quickly soon this is not a great level of growth.

Since the policy is to raise the dividend at least at the rate of RPI, and the rise in RPI is low, one can hardly be surprised! Presumably, when RPI increases, so will the dividend, in line with it.

What I need, is my income raising at a rate of at least RPI, and when a company does exactly that. and exactly what it promises, why would I complain that it isn't a "great level of growth"

[kempiejon]

What I need, is my income raising at a rate of at least RPI, and when a company does exactly that. and exactly what it promises, why would I complain that it isn't a "great level of growth"

Good enough for now, one problems though is that my RPI isn't necessarily the same the the official figures and I'd have thought come retirement that difference is exaggerated, Good for UU to stick to their policy, in fact bettering it remember though the payout increases lag RPI and with fast rising increases that puts us behind the curve. I hold UU and regardless of their current stated policy over my holding period I don't think they've matched RPI. As I've said on other boards I prefer Pennon's commitment to grow at 4% above inflation.

[Wizard]

What I need, is my income raising at a rate of at least RPI, and when a company does exactly that. and exactly what it promises, why would I complain that it isn't a "great level of growth"

Because...

...remember though the payout increases lag RPI and with fast rising increases that puts us behind the curve.

Which if you had read my post and / or quoted it more fully you would have understood was the point I was making

Terry.

[Garudadri]

The pullbacks that are imminent following the impending hikes by the fed will eventually bring down the share price. The risk reward ratio is favourable and prices in the 800-850 range are a reasonable entry or TOP up point. Looking forward to this

[Gengulphus]

... in fact bettering it remember though the payout increases lag RPI and with fast rising increases that puts us behind the curve. ...

Worth mentioning in that context that being behind the curve on that isn't always bad. It is bad when inflation is rising, but it's good when inflation is falling, and in the long term the two will balance out (unless we go into inflationary meltdown...).

Also worth mentioning that this is a tiny effect. We're talking about the dividend being maybe 1% different from what it would be if it tracked RPI precisely and with no lag, from one holding among many in one's portfolio. Effect on portfolio income something of the order of 0.05%. Normal good or bad trading conditions in a portfolio company's business can easily have 10 times that effect, and we're happy to ride them out, knowing that all sectors go through periods of good and bad trading conditions over the long term. I'd suggest adopting the same approach to periods of rising and falling inflation for United Utilities' dividends - and incidentally, the real concern over their dividends (and those of many other utilities) is IMHO not what the current policy says should happen while it's in effect, but what happens when that current policy comes to an end. The political climate at the time will essentially set the trading conditions for the next five years...

And as many people saw in the 2008 financial crisis, abnormally good or bad trading conditions in a company's business can have 100 times the effect...

Gengulphus

[Arborbridge]

Which if you had read my post and / or quoted it more fully you would have understood was the point I was making

I did understand that point: it's unfortunate but hardly something to get exercised about. That's the way the world works: you would hardly expect a company to pay out on NEXT year's inflation figures.