LONDON -- The shares of United Utilities (LSE: UU ) advanced 10 pence to 750 pence during early London trade this morning after the company confirmed it was "confident of delivering a good underlying performance" for the year to March.
United Utilities, which supplies water to about 7 million people in North West England, also claimed today that it continues to be "on track to meet its 2010-2015 regulatory outperformance targets." Within today's statement, the FTSE 100 member admitted sales since October had increased at a rate "slightly below" the allowed regulated price rise for 2012/2013. The shortfall was blamed on the "on-going impact of a tough economic climate on commercial volumes."
United Utilities added that its capital expenditure for the current year would be £750 million and that its current net debt was similar to the £5.3 billion seen at the end of September.
Today's statement did not mention anything about the dividend, which United Utilities has previously indicated should grow annually by 2% plus the rate of inflation as measured by the Retail Price Index until 2015. Within November's half-year results, the group lifted its interim payout by 7% to 11.44 pence per share and the current-year payout is forecast to gain 7% as well to 34.4 pence per share.
The near-term yield is therefore 4.6%, which is greater than the 3.5% currently on offer from the FTSE 100 but less than the 5.7% provided by an alternative blue-chip utility share.
If you already own shares in United Utilities, you may wish to read this exclusive in-depth report about that alternative opportunity within the Utilities sector. The report calculates this other share might be worth 850p vs. around 700 pence now.
Just click here to access this special Utilities review while it still remains free and available.