National Grid plc and Centrica plc are still great investments!

Centrica, Gas ring burning

If we could examine the portfolios of the UK's stockmarket millionaires, I'd wager we'd find a decent chunk of National Grid(LSE: NG) shares in a good few of them. The reasons are not hard to see.

National Grid has just revealed its results for the year to March 2016, and once again the company's predictable business meant that shareholders knew pretty much exactly what to expect -- they saw a 6% rise in adjusted operating profit and a 19% rise in adjusted earnings per share to 63.5p.

That led to a 1.1% rise in the full-year dividend to 43.34p, which might not sound a lot but it's ahead of inflation. It was actually slightly down on predictions and is possibly the reason behind the 2.7% fall in National Grid shares on the day so far, to 972p, but it would still yield 4.5% on the current share price.

Set for growth

Chief executive John Pettigrew reckons that National Grid is "well positioned to deliver asset growth in 2016/17 and beyond", and I don't think many would disagree given the company's track record.

Dividend growth has been going on for years, and the only reason the yield has dropped a little in recent years is the steady rise in National Grid shares. Over the past five years, the price is up 58% to 977p, and when we add total dividend cash of 166p over that period, we're sitting pretty on a total return of nearly 85% -- and if the dividend cash had been reinvested in more National Grid shares, it would be even higher!

The whole business of supplying energy is a very profitable one, and at Centrica(LSE: CNA) we're seeing another good example of a solid dividend-paying company -- though in this case, a fall in the share price could be providing us with a very nice recovery prospect, too.

Centrica's dividend yield for the year to December 2015 came in at 5.5%, and there's a nice hike to 6% currently forecast for 2016, even though there's a 12% fall in EPS expected -- but there's a 3% recovery on the cards for 2017.

Falling shares

So why have Centrica shares fallen by 37% over the past few years, to 201p? Well, Centrica did have to turn to an equity issue earlier this month to raise a bit of cash as its debts have risen to £4.4bn. Some of the cash raised, however, was to fund the firm's continued acquisition plans, and only this week we heard of the purchase of ENER-G Cogen International Limited for £145m.

The equity issue was fully placed with institutional investors, and they clearly don't seem worried about it. And with the shares on a forward P/E of around 13 and those big dividends looking good, I don't think we should be either.

Although the total return from Centrica shares over the past five years, including dividends, has only come to 37%, I still see the owner of the British Gas and Scottish Gas brands as a good long-term investment.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Centrica. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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