Why this UK share could power my portfolio growth for years

As a cautious investor, trust and knowledge are key when building a portfolio. And there is one part of the UK that I see in particular as a cornerstone of growth this year and into the future – National Grid (LSE:NG).

There are two reasons for this.

Reliable dividends

Not all dividends are created equal, and while companies give out a portion of their profits each year, some yield more to investors than others.

National Grid has been a star performer in my portfolio for years when it comes to dividends, with a yield of around 5%. This means that although National Grid currently accounts for 9% of the total investment portfolio by value, last year it represented 14% of the dividend income generated from all my shareholdings.

There is no guarantee that future dividends will reflect past performance. But National Grid’s half-year results for November 2022 were very encouraging, with operating profit up 44%, earnings per share up 42% and interim dividend growth of 3.7%.

Furthermore, the total value of dividend payouts has been steadily increasing over the years, despite pandemic disruptions.

Finally, there is a clear commitment from chief executive John Pettigrew to aim to grow the dividend per share in line with the CPIH, the main measure of inflation.

Put all this together and it gives me confidence that National Grid will remain a strong dividend player in my portfolio for years to come.

Stable stock performance

Investing in today’s climate can be unpredictable, as once-promising businesses suddenly collapse in value (I’m looking at you, Cazoo). But for me, National Grid represents an oasis of relative calm.

Every share price can show volatility in the short term, but in the long term National Grid tends to hover between 900p and 1,100p.

Investing at the right time remains important. But there is always the security of a strong potential dividend income to cover any reduction in the share value, especially when planning to hold shares for a long time.

National Grid Power plays an important role, now and in the future, powering the economy through energy infrastructure, distribution and transmission. It is a leading investor in net zero delivery, the transition to a fossil-free future in the UK and US markets, with major projects including significant investment in offshore wind that will power millions of homes.

My long time partner

For my investment portfolio, I see National Grid as a long-term partner. Even in a post-fossil fuel world, with investments in wind and solar, as long as the wind blows and the sun shines, National Grid should continue to generate strong profits, resulting in strong dividends and stock price performance. If the encouraging signs persist, I expect my portfolio share to increase to maximize potential.