As a regulated utility, its earnings are largely shielded from economic cycles. Instead, they are driven by long-term infrastructure investment and regulatory frameworks. That gives the business strong visibility. In today’s uncertain macro environment, that matters more than ever.

But the investment case may be shifting. This is no longer just a defensive income story. Electricity networks now sit at the centre of two major structural trends: the rise of artificial intelligence and the rapid electrification of industry and transport.

That changes the narrative. The question is no longer just about stability. It’s whether the market fully recognises the company’s role in powering the next wave of demand growth.

Electrification

What is changing is not the regulatory model, but the demand placed on it. Electricity networks are no longer supporting a stable, mature system — they are becoming the constraint in a rapidly electrifying economy.

AI infrastructure, data centres, and the shift towards electric transport and heating are all driving a step-change in power demand. Crucially, that demand does not spread evenly across the system. It concentrates around grid capacity, turning networks into a critical bottleneck.

That has important implications. When capacity becomes scarce, investment follows — and for regulated operators, that feeds directly into a growing asset base and higher allowed returns over time. In effect, demand growth translates into earnings visibility rather than volatility.

Seen through that lens, National Grid looks less like a passive income stock and more like core infrastructure for a structurally expanding electricity system.

Accelerating demand

That demand story is not theoretical — it’s already feeding through into investment plans.

The company is currently working to connect up to 19GW of additional electricity demand in the UK by the early 2030s. Strikingly, roughly half of that is expected to come from data centres alone — a clear signal of how quickly AI is reshaping electricity consumption.

To support that, investment is ramping up at pace. More than £5bn was deployed in the first half alone, with full-year spending expected to exceed £11bn. Over the longer term, a £60bn programme is set to expand the regulated asset base, driving roughly 10% annual growth.

That matters because, in a regulated model, higher investment feeds directly into future earnings. What looks like a stable utility on the surface is, in reality, gearing up for a sustained period of demand-led expansion.

What’s the verdict

Of course, there are risks. National Grid’s growth depends on heavy investment, which means higher debt. If interest rates stay elevated, borrowing costs could rise and put pressure on returns and the share price.

At the same time, as a regulated business, allowed returns are not entirely within management’s control, creating some uncertainty over how quickly higher costs can be passed through.

That said, in my view, the scale of demand now building across electricity networks is easy to underestimate. As investment translates into a larger asset base and more predictable earnings, I see this as a business with both defensive qualities and long-term growth potential — which is why I view the stock as one to consider.

The post National Grid shares: a classic sleep-well stock for uncertain markets? appeared first on The Twelfth Magpie.

That might not sound too explosive compared to some US tech stocks, but for a utilities business, this level of growth’s pretty extraordinary. Don’t forget that for most of the last decade, this FTSE stock has been flat.

So what’s going on? And will this momentum continue in 2026?

Why’s it rising?

There are a lot of factors influencing National Grid shares today. However, two of the most consequential are a £60bn infrastructure investment programme and a transformational regulatory uplift.

The goal’s to nearly double the size of the group’s transmission network by 2029. Beyond significantly boosting its capacity to support new AI data centres, the enormous investment programme also allows the company to increase its regulatory asset base (RAB), directly translating into more permissible revenue by regulators.

The timing of this comes as the new five-year RIIO-T3 price control framework comes into effect. Compared to RIIO-T2, the updated framework’s far less restrictive, enabling National Grid to earn higher regulated revenues and better fund its infrastructure investment plans.

Subsequently, the group’s underlying earnings for its 2027 fiscal year (ending in March) are now expected to grow 13%-15%. And this rate of expansion of a regulated entity is practically unheard of.

With that in mind, it’s no wonder that National Grid shares are on the rise. But is this growth now baked into its share price?

Is it too late to buy?

While National Grid’s 2027 fiscal year looks like it’s on track for a gangbusters year, future growth will likely slow. And the general consensus points towards 6%-8% earnings growth on a compounded annualised basis between now and 2031.

That’s still impressive. But it’s important to recognise this is dependent on management successfully executing its £60bn investment programme – something that’s far easier said than done.

Even if internal operations run flawlessly, external supply chain disruptions for transformers, cables, and substations could create expensive delays. And with other countries seeking to upgrade their own infrastructure in 2026, equipment shortages have already started to crop up.

With the forward price-to-earnings ratio now standing at 14.3, this growth does indeed appear fully priced in. And when combined with the emerging risk factors, it’s why a number of institutional analysts have started updating their recommendations from Buy to Hold.

As such, it seems unlikely the National Grid share price will deliver another 30%+ jump over the next 12 months. However, that doesn’t mean there isn’t a valid investment case to be made here.

For growth investors like me, National Grid’s most likely a bad fit in April. But for conservative investors looking to build a defensive portfolio of mission-critical companies with stable cash flows and long-term structural demand, National Grid might still be worth a closer look.

The post What on earth’s going on with the National Grid share price? appeared first on The Twelfth Magpie.

A new year means a fresh £20k contribution allowance for tax-free investment into a wide range of assets, including stocks, bonds, and commodities.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

When building towards a passive income stream, this tax relief can make a huge difference.

But don’t take my word for it — check out these calculations.

The road to £10k a year

Whether aiming for returns from growth or income, bringing in £10,000 a year will require a significant investment.

You won’t be able to achieve it in just one year, but rather grow towards it through compounding. This means regular contributions and reinvested dividends.

For example:

• Start with a £20k lump sum.
• Invest a further £300 per month.
• Aim for an average yield of 6%.
• Assume average capital growth of 4%.

Based on my calculations, that ISA could grow to £171,270 within 15 years. Assuming the average yield held, it would pay out £10,276 a year.

By boosting the annual contributions to £500 a month, you could slash four years off that timeline.

Of course, these are just projections based on historical market averages. They’re neither a best-case scenario nor worst, but the actual result could vary wildly.

So how can we better ensure reliable, regular returns?

The low-risk, reliable portfolio

One thing’s for sure: when aiming for long-term, stable income, it’s best to play it safe. This means avoiding speculative growth stocks, overblown hype stories, and short-term gains.

Rather, focus on steady returns from defensive shares with long and established dividend track records.

An easy way to spot these shares? Just think of the most boring company you know — for example, National Grid (LSE: NG.).

Here’s why…

Predictable returns

As the UK’s largest utility company, it keeps the lights on and the gas flowing. That’s a pretty critical and high-demand service, but it’s not exactly exciting.

Exciting can be fun but it usually means volatility and unreliability — the opposite of what we’re looking for.

National Grid’s earnings come from regulated assets, meaning returns are set by regulators. That makes revenues stable and relatively predictable, even during economic downturns.

It pays a realistic, well-covered dividend that often results in a lower yield (3%-5%). But it reduces the chance of having to pause payments, which it hasn’t done for 31 years.

Recently, it has invested heavily into a green energy transition, upgrading the grid for renewables like wind and solar. That forced a 13.69% dividend reduction.

Ideally, the move should help reduce costs in the long run but there’s a always a risk it doesn’t pay off. If regulatory changes hit profits, it may have to cut dividends further.

The bottom line

When investing with a 10-20 year outlook, focusing on reliable companies usually works out better than betting on the latest fad.

Aside from utilities like National Grid, which is worth considering, retail and healthcare stocks are also good options. Think GSK, Tesco, or Unilever.

But don’t be too careful — a few growth stocks like 3i Group or Diploma can also be helpful to get the momentum going. And that’s just a few of the options I’ve explored lately…

The post How to turn a Stocks and Shares ISA into £10k of annual passive income appeared first on The Twelfth Magpie.

Could that make it the sort of passive income generator I would like to have in my portfolio as a way to try and mitigate the potentially harmful impact of inflation on my dividend income?

This business has some compelling characteristics

Before getting into the dividend, let me explain why I like the National Grid business.

People need power and, over time, consumption looks set to grow, not decline. Moving power from where it is generated to the point of use will therefore continue to be big business.

Not only is it big business, but it is also one that is costly and difficult to get into. The sort of networks that National Grid has built over decades are impossible to replicate in many cases. Even if a rival could do so, it would likely be prohibitively expensive.

That gives National Grid strong pricing power – potentially so much, in fact, that the government regulates many of its prices. That can be seen as bad for profit potential, but it does help provide some transparency about possible future pricing levels.

But there’s something I don’t like about National Grid

So far, so good.

However, while the company has a lot of strengths, its chosen area of business also exposes it to a significant challenge. That is keeping the network operational and fit for purpose.

That is not just about sending a couple of engineers out in vans on a stormy night (important though that can be). It also involves the enormous task of maintaining and reshaping the grid to meet changing patterns of energy generation and consumption.

Such infrastructural work is expensive.

How expensive? Put it this way: in the first half of its current financial year alone, the company spent £5bn on capital investment.

That is a lot of money even for a business with a market capitalization of £63bn. Indeed, ongoing capital expenditure helps to explain why National Grid has amassed a net debt of £42bn.

The dividend has been cut before – and could be again

So what, you may ask.

National Grid’s high ongoing revenue generation potential could surely help fund such capex requirements?

In reality, the funding is an issue. Revenue in the first half was £7bn. So that £5bn of capex is substantial.

It makes sense that a power network operator spends a lot of money on maintaining and updating the network. However, National Grid has other things it needs to fund too, from paying interest on that large debt pile to employee wages.

A dividend cut could be one solution to its spending needs and indeed, it already reduced the dividend per share last year despite its stated aim of growth.

I fear that could happen again in future, so I have no plans to invest.

The post Could National Grid shares offer me a dividend that won’t be hurt by inflation? appeared first on The Twelfth Magpie.

Then it took a sharp (but short-lived) dive. After recovering, it climbed to new highs but by the early 2000s, things were looking shakey. 

Within two years, it had lost almost 50% of its value.

Recent activity is mirroring those days — speculative tech hype has driven the index up over 100% since the pandemic. Recently, it took a sharp dive into correction territory before making a quick recovery.

When looking at a long-term chart, the similarities are jarring. Are we on course for a repeat of the early 2000s?

Not exactly…

Just because charts correlate, doesn’t mean markets are the same. The key similarity is overhyped tech optimism — back then it was internet startups, now it’s AI.

Valuations look stretched in growth areas, and sentiment feels euphoric at times. But the differences are big. Geopolitics is messier today, with Middle East tensions and trade rows, unlike the relative calm of the 90s.

UK companies are more global and dividend-focused, not pure tech plays. And central banks are quicker to step in with rate cuts.

But while history may repeat itself, past performance is no indication of future results. Even if shares dip sharply, crashes can present opportunities for long-term investors. The trick is to be ready to pounce before the market recovers.

How UK investors can prepare

There’s never any reason to panic, even if a crash looks inevitable. These things happen, they’re normal, and in the long run, they balance out.

However, it pays to err on the side of caution. In times like these, I tend to reduce speculative positions (like AI bets) and weigh more heavily into defensive stocks (healthcare, utilities). With more stable revenues and share prices, these types of stocks can help limit losses.

Plus, it never hurts to keep some cash on the sidelines to snap up bargains.

What are UK defensive shares?

A good example to consider is National Grid (LSE: NG.), the utility giant that runs the UK’s electricity and gas networks. It’s as defensive as they come — people need power no matter what the economy does.

The shares trade around 1,340p, with a forward yield near 3.5% and full-year dividend of 47p. With a payout ratio of 80%, coverage isn’t great, but it typically aims to beat inflation.

The latest results show steady revenue, helped by regulated returns from both UK and US operations. With Bank of England rates expected to ease slightly in 2026, borrowing costs should fall, supporting profits. 

Its valuation looks moderate, at about 23 times earnings, suggesting its trading at a fair price.

But still, risks exist. Debt’s skyrocketed lately as a result of grid upgrades, which could become a problem if rates stay high. Meanwhile, stricter regulations or green energy shifts could impact profits in the short-term.

The bottom line

Stock market crashes are inevitable but notoriously difficult to predict. Being prepared can reduce the chance of panicking and making rash decisions.

Defensive shares can feel like holding cash in low-growth positions but, over the long run, the risk reduction can make a big difference. And this isn’t the only one I’ve explored lately…

The post The FTSE 100 looks a lot like the late ’90s. Are we heading for a 2000-style crash? appeared first on The Twelfth Magpie.

But it’s not just about income. The share price has also risen around 58%, taking the total return to roughly £9,560 – equivalent to an annual return of 14%.

That’s the part many investors overlook. So-called income stocks aren’t just about yield — they can quietly build substantial wealth over time through a combination of dividends and steady capital growth.

The real question now is whether the stock can continue delivering that same compounding over the next five years.

Mispriced stock

What’s interesting about National Grid right now is not what the business is, but how the market is still pricing it.

For much of the past few years, sentiment has been shaped by higher interest rates. As bond yields rose, investors increasingly treated utilities as bond proxies, leaving the shares anchored to a ‘low growth, high income’ perception.

But that framing is starting to look outdated.

Electricity demand is no longer stable — it’s accelerating in ways many investors are still underestimating.

AI data centres are a clear example. They’re not just adding incremental demand; they’re creating concentrated spikes in electricity usage that existing grid infrastructure wasn’t designed to handle. In many regions, the constraint is no longer generation, but transmission capacity.

That matters because grid operators sit directly on that bottleneck.

Capital expenditure is shifting away from routine upgrades. It’s now driven by demand-led expansion and structural capacity shortages rather than regulatory cycles alone.

Electrification of transport and heating is adding further pressure. EV adoption and industrial electrification are accelerating the shift onto the grid.

Taken together, this creates a very different backdrop from the ‘slow utility’ narrative the market still leans on.

Risks

As a heavily regulated utility, the company’s returns are ultimately set through negotiations with policymakers. If outcomes are less favourable than expected, allowed returns could fall, impacting earnings and shareholder value.

This is amplified by the group’s large, capex-heavy investment programme, which is funded in part through leverage. Higher interest rates or weaker regulatory settlements could therefore pressure both the balance sheet and long-term returns.

What’s the verdict?

What ultimately matters for National Grid is not short-term sentiment, but the steady expansion of its regulated asset base — the capital it’s allowed to earn returns on.

Every pound invested into upgrading and expanding the grid is added to this asset base, and regulators then set returns on that growing pool of capital. In other words, the more efficiently it invests in essential infrastructure, the larger its earnings base becomes over time.

This is why demand matters so much. Rising electricity usage from AI, electrification and data centres is not just a volume story. It directly drives more grid investment and grows the asset base, which supports long-term cash flows.

In its latest year, the regulated asset base grew at around 10%, highlighting the strength of this compounding mechanism even in a higher-rate environment.

It’s this combination of visibility, inflation linkage and structural demand growth that drives my view. The market still underestimates the long-term income potential. That is why I recently added it to my position.

The post £5,000 invested in National Grid shares 5 years ago is now worth… appeared first on The Twelfth Magpie.

Here, I want to see how much a typical share investor would have made if they put £20k in an ISA 12 months ago.

Winners and losers

Okay, let me clarify something straight away: there is no such thing as a ‘typical’ investor. Each of us has a different investing style, which influences what we buy on the stock market. More ambitious investors may have targeted large capital gains with growth stocks, for instance. Risk-averse share pickers may have preferred the comfort of income-paying dividend stocks like utilities, telecoms and banks. And the returns they enjoyed would have different accordingly.

Many shrewd investors would have enjoyed supersized gains with UK shares. There are 16 stocks on the FTSE 100 and FTSE 250 that have doubled in value or more in the last year. These include FTSE-listed Airtel Africa, Fresnillo and Lion Finance — these have risen 137%, 287% and 103%, respectively.

But then lots of stocks haven’t faired nearly as well. Many popular growth shares like Greggs and Sage have actually fallen over the last year.

Huge returns

With roughly 2,000 stocks just on the London stock market, there are many ways investors can target a target a juicy ISA return. And that’s excluding the many exchange-traded funds (ETFs) that track certain indexes or particular themes. So there’s no one universal answer as to what a £20,000 ISA would have returned over the last 12 months.

But what about someone took the simple option and bought two index trackers: one that followed the FTSE 100, and another that tracked the FTSE 250? They’d have made a pretty solid return, enjoying a return of 23% on the first and 13% on the other.

If our investor split a £20,000 investment equally across these trackers, they’d have £23,600 sitting in their ISA today.

What should investors buy today?

Investing in tracker funds could be another profitable play over the next year, too. But amid rising instability in the Middle East, choosing individual stocks to buy could be a better option to consider.

National Grid (LSE:NG.) is one stock from the FTSE 100 I feel deserves a close look. Like any share, it isn’t totally immune to events in Iran and the broader region. Surging energy prices could cause an inflationary shock, pushing up interest rates and driving borrowing costs northwards. Given the company’s high debts, this would be a problem.

Yet National Grid shares could still be a more stable pick than most. It operates in a highly defensive industry, generating reliable cash flows that underpin dividends. Speaking of which, the dividend yield here is an index-beating 3.9%.

The thing is, National Grid could be a great stock to consider for the long haul and not just these uncertain times. As the UK population expands and the green energy transition accelerates, it has significant growth potential in my view. In my view, it’s one of many top UK stocks to look into for the current ISA year.

The post £20,000 invested in the stock market a year ago is now worth… appeared first on The Twelfth Magpie.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Crunching the numbers

There are three factors that will influence the size of an ISA – the amount invested, the growth rate, and the length of time over which it’s held.

Of these, the annual growth rate is the one that’s most outside the control of the investor. However, as a benchmark, from 2016-2025, the FTSE 100 returned (with dividends reinvested) an average annual rate of 9.5%. According to IG, from its launch in 1984 to 2019, the index grew by 7.8%. The figure drops to 5.8% if dividends are excluded.  

Obviously, it’s better to invest for as long as possible. Little and often is a good philosophy.

When asked whether now is a good time to start, the answer is always likely to be yes. By taking a long-term view, timing the market becomes largely irrelevant.

So?

With this in mind, the table below shows how long it would take for a monthly investment of £1,667 to grow to £1m, depending on the growth rate achieved. The figure I’ve chose isn’t random. It’s the monthly equivalent of the £20,000 annual limit that can be put into a Stocks and Shares ISA.

Clearly, this is a lot of money. But nothing in life is free. However, to put this in context, the various scenarios show that the total amount invested could double within 21-26 years. What’s not to like about that?

Taking 25 years as a reasonable period over which to invest, £1,472 a month would grow to £1m, assuming a 6% annual return. At 8%, this figure drops to £1,094.

Not everyone’s going to be in a position to build a £1m+ ISA but these figures show that with patience and discipline it’s possible.

A slow burner

One stock that’s delivered a 6% increase in its share price over the past 10 years is National Grid (LSE:NG.), the energy group. And with a current (10 April) yield of 3.5%, it could be one for long-term investors – those looking to build a £1m+ portfolio — to consider.

Admittedly, it’s likely to be a slow and steady performer. But reliable and consistent – if unspectacular — returns are a feature of operating in a regulated industry. For example, the group’s allowed to earn just over 6% a year from managing the high-voltage power network in England and Wales.

It’s targeting an annual 6%-8% increase in earnings per share up until 2029. It also aims to grow its dividend in line with inflation.

However, if interest rates go up – or remain higher for longer – the group’s earnings could come under pressure. At 30 September 2025, it had total borrowings of £45.9bn. It surprised investors in 2024 with a £7bn rights issue.

Despite this, I think it’s the sort of stock that could be put into an ISA and forgotten about. The majority of its earnings come from markets where it doesn’t have to worry about winning new customers. This gives it more visibility — and greater certainty — over its future earnings than other businesses of a similar size.

The post Is now a great time to start aiming for a £1m Stocks and Shares ISA? appeared first on The Twelfth Magpie.

Interested to know which dividend shares they like in particular? Here’s a look at the top individual stock holdings of AJ Bell’s ISA millionaires.

Millionaires like blue-chip dividend stocks

Back in February, the broker published a list of the most owned investments among this cohort of investors on its platform. Not only did it highlight their favourite stocks, but it also listed their favourite investment trusts, funds, and ETFs (these people tend to take a diversified approach to investing).

On the stock side, the five most popular shares were:

• Shell
• GSK
• Legal & General
• National Grid (LSE: NG.)
• Aviva

These are all ‘blue-chip’ FTSE 100 companies with healthy dividend yields (ranging from 3%–9%). So, these investors seem to prioritise stability and income.

I should point out though that these aren’t necessarily the best shares to consider buying if someone is aiming to become an ISA millionaire. Most existing millionaires are older investors (many are in their 70s) and an approach focused on stability and income is going to match their goals and risk tolerance.

Someone younger targeting a million-pound ISA could be better off focusing on stocks with more growth potential. This approach could enable them to achieve their goals faster.

Another thing to point out is that the millionaires may have bought these shares for their ISAs 20 or 30 years ago. A lot has changed since then and there could be better opportunities for those investing for the next 10, 20, or 30 years.

A stock for the next 10 years?

Zooming in on the five names though, the one that looks most interesting to me today, from a long-term perspective, is utility powerhouse National Grid. I see it as the most resilient to change and technological disruption (the insurers could face some challenges here).

As the world becomes more digital in the years ahead, demand for electricity is likely to rise significantly (due to the huge power demands of data centres and AI). This is where National Grid comes in – it’s essentially the ‘landlord’ of the infrastructure that makes these technologies possible in the UK (and some parts of the US), pocketing a return on the electricity that flows through its network.

It’s worth noting that the company is spending heavily right now to build out and enhance its network infrastructure for the AI era – between now and FY2031 it plans to spend about £70bn. This kind of spending is a risk as it could hurt profitability.

However, the group believes that it will still be able to achieve underlying earnings per share growth of 8%–10% per year in the medium term (13%–15% this financial year). It’s also planning to grow its dividend payout (where the yield is about 3.6% currently) in line with UK inflation.

So overall, there’s a lot to like, in my view. Trading on a forward-looking price-to-earnings (P/E) ratio of 15, I think it’s worth a closer look today.

The post 5 dividend shares that ISA millionaires love appeared first on The Twelfth Magpie.

Global conflict has however, hit National Grid shares along with so many others. And at the time of writing, they’re down from their 52-week high in early March. But we’re still looking at a rise of around 50% over the past five years.

Volatile rise

Checking back 10 years and more, it looks like the ride’s been a bit volatile for National Grid shareholders. On the bright side, during a price dip, the dividend yield rises for new investors. And what really counts is the total return, including both dividends and price gains.

The forecast dividend is currently at a fairly modest 3.7%. That’s essentially in line with the FTSE 100 average. And over five years, the National Grid share price has come in slightly below the Footsie. In fact, it hasn’t been a great decade for the stock compared to the wider stock market.

But if we look back as far as the company’s original entry into the FTSE 100 in 1995, the share price has soared by over 400%. Over the same timescale, the FTSE 100 has managed less than half that.

What does it mean?

If National Grid can repeat its 30-year performance over the next three decades, I think it could make it a slam-dunk buy for a Stocks and Shares ISA. But we shouldn’t assume that, with one key trend broken in May 2024.

That’s when the company launched a surprise new £7 billion rights issue. It was to fund a five-year infrastructure upgrade plan. And at the time, it was the biggest such issue in the UK since 2021. It came as a particular shock to shareholders, who really hadn’t expected it. No, the company was renowned for nothing much changing year after year, and just steadily paying a progressive annual dividend.

It meant the per-share dividend actually fell, diluted by the new shares in issue. Many investors had simply assumed that could never happen.

The question now is whether National Grid is still a solid stock, with a strong safety margin, to consider buying today. And I’d call that a yes.

Safety first

For me, a Stocks and Shares ISA should ideally be based on a bedrock of safety. And looking at National Grid, I just don’t see how anyone else could be remotely likely to breach its moat and get a serious foothold in the UK-wide energy distribution network. Oh, and there’s American infrastructure to add a bit of excitement too.

We need to forget the old ways though. The world’s changed, and National Grid along with it. And the energy business being a regulated one also adds risk.

What about a forward price-to-earnings (P/E) ratio of 16, dropping to 13 by 2028 forecasts? And a dividend predicted to edge up 7.5% in the next three years? That makes it worth considering for a long-term ISA, I reckon.

The post Is National Grid one of the best stocks to buy for an ISA right now? appeared first on The Twelfth Magpie.