Key Highlights

  • National Grid plc (LSE:NG.) offers a Dividend Yield of 3.88% and is one of the largest utilities in the FTSE 100.
  • The Interim Dividend for 2026/27 rose 3.8% to 16.97p per share from 16.35p.
  • The full-year dividend for 2025/26 was 48.49p, up 3.8%, in line with UK CPIH inflation.
  • Capital investment in the first half increased by about one-third to £6.7 billion.
  • Management upgraded full-year underlying EPS growth guidance to 15% to 16%.

The UK's Grid Builder Keeps Delivering Income

National Grid plc (LSE:NG.) owns and operates electricity transmission networks in England and Wales, along with electricity distribution in the UK and energy networks in New York and New England. It sits at the heart of the energy transition, and its multi-year investment plan has made it one of the most closely watched stocks on the FTSE 100.

With a dividend yield of 3.88%, LSE:NG. offers a steady income stream backed by regulated Assets and a policy that aims to grow the dividend in line with UK inflation. Recent half-year results reinforced that commitment.

Half-Year Results 2026/27

On 5 November 2026, National Grid reported results for the six months to 30 September 2026, its first set of half-year numbers under Chief Executive Zoë Yujnovich. Capital Investment increased by around one-third to £6.7 billion, as major projects progressed across the UK and the US.

Underlying operating profit rose 13% to £2.59 billion and underlying EPS increased 22% to 36.5p. Statutory EPS more than doubled to 26.9p, reflecting the absence of prior-year charges and divestment-related impacts. Revenue for the period rose to £8.14 billion from £7.07 billion. Management slightly upgraded full-year underlying EPS growth guidance to 15% to 16%.

Yujnovich said the first-half progress further strengthened confidence in delivering the five-year framework set out in March.

Dividend Policy and Recent Payments

National Grid's dividend policy aims to increase the Dividend per share each year in line with UK CPIH inflation. The interim dividend is set at 35% of the previous year's full dividend.

The interim dividend for 2026/27 was declared at 16.97p, up 3.8% from 16.35p. The shares go ex-dividend on 19 November 2026, with payment due on 12 January 2027. For 2025/26, the final dividend was 32.14p, giving a total of 48.49p for the year, also up 3.8%.

The company has historically offered a scrip dividend alternative, which allows shareholders to receive new shares instead of cash. This helps retain capital within the Business to fund investment.

Earnings Cover and Payout Ratio

For 2025/26, underlying EPS was 78.0p, up 8%. Against a total dividend of 48.49p, the Payout Ratio is around 62%, implying cover of about 1.6 times. With underlying EPS guided to grow 8% to 10% a year on a compound basis through 2030/31 and dividend growth linked to inflation, cover should improve over time.

Investment Plan and Balance Sheet

National Grid has set out a five-year investment plan of at least £70 billion, with around two-thirds already covered by regulatory agreements. Asset growth is expected at around 10% a year. This scale of investment requires significant funding, and net Debt continues to rise. The group raised around £7 billion through a rights issue in 2024 to support the plan and has been selling non-core assets to recycle capital.

Regulated returns provide strong visibility over future earnings, which in turn supports dividend visibility. However, rising debt means the company must maintain investment-grade Credit ratings, which is a key consideration for the board when setting Shareholder returns.

What Analysts and Investors Are Saying

Coverage across Reuters, Bloomberg and UK investment platforms highlighted the accelerating investment programme and upgraded Earnings guidance. Analysts noted that the shares have moved broadly in line with the FTSE 100 during 2026 and described the dividend yield near 4% as attractive for a defensive utility.

On social platforms and investor forums, National Grid is often discussed as a core income holding, with investors valuing its inflation-linked dividend and its central role in electrification, data centre connections and grid upgrades.

Risks to the Dividend

Key risks include regulatory decisions, particularly Ofgem's future price controls in the UK and rate cases in the US, rising interest rates increasing financing costs, and project execution risk on large infrastructure programmes. Political pressure around energy bills could also influence regulatory outcomes. Because the dividend policy is linked to CPIH, very high or very low Inflation would affect the pace of dividend growth.

Verdict: Is the 3.88% Yield Sustainable?

National Grid plc (LSE:NG.) offers a 3.88% dividend yield underpinned by regulated earnings, a clear inflation-linked policy and growing underlying EPS. The payout ratio of around 62% and strong earnings growth guidance suggest the dividend is sustainable, with cover likely to improve. The main watchpoints are rising debt and regulatory risk, but for long-term income investors, LSE:NG. remains one of the most dependable dividend payers on the FTSE 100.