13, 2022 /PRNewswire/ - To help customers who need financial assistance, as winter energy prices are expected to rise significantly due to the global energy crisis and inflation, National Grid is committing $17 million in philanthropic funding. There are other high-yield options available with materially less headline risk.National Grid will support local non-profits and charitable organizations in Massachusetts and New York to assist the most impacted customers and communities In these uncertain times, the added risks National Grid faces today just aren't worth the effort for most investors. And that's an uncertainty that other utility options don't have to face. To be fair, the political threat here could be history, too, but that only highlights the real problem: It's hard to tell for sure at this point. government, the coronavirus scare and a global recession could easily bring privatization issues back to the fore. Better optionsĪll in all, it is probably too soon to suggest that National Grid's privatization headwind has totally gone away. Perhaps worse, ideas around payment have included investors receiving government bonds, which isn't nearly as desirable as cash. government to take over utility assets will include a fight over the value of those assets (the government isn't likely to be generous with its offers). Note, too, that the impact of privatization on shareholders could be material, since any effort by the U.K. That the company took this step shows just how real the threat is, and it is hard to believe that one election has eliminated the issue. This move increases the protections afforded to shareholders, but doesn't eliminate the political threat posed here. In late 2019 it created companies in countries that have bilateral trade treaties with the U.K. To its credit, National Grid has been taking steps to mitigate any potential damage. And that could easily keep the nationalization issue alive for longer. If a recession were to unfold in Great Britain, calls for government action to help the U.K.'s populace would likely increase, not decrease. And, with the COVID-19 issue spreading across the globe, a worldwide recession looks increasingly likely. Notably, he will remain in Parliament and likely be a key voice in the Labour party. Corbyn stepping down may not, in fact, end the threat. The problem with this logic is that nationalization is an uncertain political process, and the winds can often change in quick and unexpected ways. ![]() Investors took this as good news, and swiftly bid up shares of National Grid, assuming nationalization was a dead issue. A weak showing in elections in late 2019, however, led Corbyn to announce that he intends to stand down as the head of the Labour party. Nationalization would pretty much destroy around half of National Grid's business in one swift move. The left-leaning Labour party was the one pushing this effort under the guidance of Jeremy Corbyn. to nationalize key industries, including in the utility space. One piece of that is the fact that National Grid's multiple-country exposure increases complexity, but that's not all that's going on. As a reference, the yield on Vanguard Utilities ETF, a proxy for the utility space, is roughly 3%. But here's the thing: National Grid's 5.5% dividend yield is extremely high by utility standards. ![]() Generally speaking, diversification is a net benefit to investors, since poor performance in one area of a business can be offset by good performance in another.
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