Wednesday tips round-up: National Grid, Petra Diamonds

30th Jan 2013 07:00

At 5.8 per cent National Grid pays the highest dividend of any company on the FTSE 100. However, can the company fund the upgrades the country needs and continue to pay a decent dividend to shareholders. Further complicating matters, the firm is in negotiations with Ofgem over a new pricing regime, but can it deliver? The Times´s Tempus believes that at the current moment those fears look misplaced. In fact, the company has indicated that it wishes to maintain the dividend, at least. National Grid's trading statement yesterday had little to add. One business, where the poor outlook seemed intractable, was sold at the start of last year, but no further disposals look likely. Tempus also believes that the Grid will not take it to the wire with the regulator. Even if it does, he does not think the company will want to disappoint on dividend growth. That attractive yield, the reason to hold the shares, looks safe enough for now he adds.The shortfall at Petra Diamonds is less significant than it might seem at first. The world's sixth-largest producer said that while production rose by 31% in the first half to the end of December, to 1.25m carats, it would miss earlier guidance for the year of about 2.85m by about 200,000 carats. As well, as a result of its planned capital spending programme of $300m or more over this financial year and next Petra will be ramping up production by means of a more efficient extraction process. From investors' point of view that means that earlier targets will be met, Tempus says. So the company is expected to hit production of five million carats a year by 2019. With most of the capital spending behind it, Petra should be cash-positive by 2016 and in a position to start considering a dividend. By end of the year investors should also have news on the sale of three older and less productive mines announced in the autumn. Petra shares have recovered from below 100p in the autumn and closed at 114¼p last night. They should make further progress in due course on more positive news flow, Tempus concludes.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB