Britain's main energy network provider National Grid gave a long-awaited update on its dividend policy on Thursday, meeting current-year expectations with a 15 percent hike and setting a long-term target of 8 percent growth.
The new policy replaces a 7 percent target and reflects its improved cash position after a year's steady trading; the sale of its non-core telecoms assets last year and its $11.7 billion acquisition of New York-based energy firm KeySpan .
The move will lead to a total dividend of 33 pence in the year to March 31.
National Grid shares fell 1.7 percent, in line with a broadly weaker utilities sector, losing most of the gains since last week when analysts started trying to weigh up the expected dividend hike.
Analysts at Morgan Stanley said National Grid had a track record of beating its own dividend growth targets and they saw the 8 percent figure "as a floor rather than a target".
Analysts at Lehman brothers said the hike was below its top-of-the-range forecast, but marginally ahead of consensus.
"We would not be surprised if actual returns end up being higher than the commitment, as in the past three years," they said in a research note.
"Investors can also look for additional returns from the $2bn Ravenswood disposal that will be completed before 31 March," they added, referring to the planned sale of a 2.5 gigawatt power station in New York.
"The sale process, which is being conducted through a competitive auction, is well underway," said National Grid.
Its share buyback program has cost 1.33 billion pounds so far, leaving around 600 million still to be returned to shareholders.