thanks for popping back, and thanks for your kind comments. Essentially, yes your 10k would earn you 4.9712%, as long as National Grid honoured their announced dividend payments. Sometimes, companies cut their dividend as Tesco and Centrica (the gas company) did recently. I think Morrison’s supermarkets are also going to cut their dividend this year too. Sometimes, companies keep it steady (often German companies do this) and sometimes companies raise their dividends. With a share like National Grid, it is not a company that is growing at enormous rates, but it is considered to be a steady and fairly safe company to invest in. Therefore, it is likely that dividends will be held steady or will increase by a very small amount. This is usually the case with large utility companies.

As the price of shares fluctuates on a daily basis, the yield will go up and down accordingly. The yield you get will be based on the price you pay when you buy the shares. Hopefully, National Grid will raise their dividend in line with inflation, or keep it steady so we will get a decent amount of money returned to us.

The other thing to note, is that you can either buy the shares using a lump sum of say 10k, or you can ‘drip-feed’ into the account by buying some shares every month. This averages out the cost of your purchase, so you would basically have paid the average price over the course of a year, instead of buying at just one moment and then seeing the price go up and down through the year. Of course, you can always deposit the money in one go into your account to take advantage of this year’s NISA allowance, but you wouldn’t have to do anything with it until you wanted to.

Thanks again for your questions,

CHEERS

Thank you very much for your reply, I am very grateful:) I really love your site and you have a knack for explaining things so that they are easily understood.

I followed your link to investorease to the info spec on National Grid, there it quotes a yield of 4.9712, does this mean that if I invest say 10k that I will get an annual return of 4.9712%? Sorry for the basic questions!

THanks

Claire

The first thing to think about, is if you’re British you will probably want to invest through an ISA, now called a NISA. When you buy shares through a NISA, you receive the dividends and there is no extra tax to pay on them. Shares already have something called ‘dividend tax credit’ applied to them, which is 10%, and unfortunately, you can’t claim that back. You can contribute up to £15,000 this tax year into your NISA.

There are several companies you can open an account with such as Interactive Investor (who we use) – they offer a regular investing servie where you can buy shares once per month for £1.50 – I think this is the cheapest way to buy shares I have ever found in the UK.

If you want to know the rate of return on a share (dividend yield) you can either look it up on a website such as Investor Ease, or whichever company you choose to open an account with. Or you can work it out yourself:

dividend yield = annual dividend per share/share price

British shares usually pay dividends twice per year. You get about 1/3 of the dividend, and then about 6 months later (or less) you get the other 2/3 of it. There are a very few British companies which pay every 3 months, such as Royal Dutch Shell, and most American companies pay every quarter too.

I hope this answers your questions, please let me know if you need any more help. I am not an IFA or any kind of certified professional, but I am just an average person, a fellow investor.

Best Wishes

I am totally okay with investing in Vodafone. The only problem is, that I bought last year when it was really cheap, so now if I add to my position I am having to pay over 15% more, which is kind of shocking, BUT it still comes out pretty well in my screener, so it is still a good value share right now. I think the huge cash pile can only be a good thing, right?

Novice investor here. I am interested in buying shares but haven t a clue how to go about it, i.e. where etc. I am interesting in starting off with national grid. How often do they pay dividends?

Could you tell me how you work out the rate of return. Are dividend’s taxed at source or paid gross?

Thank you very much

Great list once again!

Quick question though: how do you feel about adding VOD now that they won’t be able rely on the fresh Verizon cash anymore? I didn’t care about it too much when I invested in VOD back in November of last year because I think they telecoms operator now can use its huge pile of cash to make further strategic investments, but it could put some folks off.

Cheers,
NMW