MIDAS SHARE TIPS UPDATE: Water firm Severn Trent stays liquid through pandemic

MIDAS SHARE TIPS UPDATE: Water firm Severn Trent stays liquid through pandemic

Hygiene has become a central plank in the fight against coronavirus and Government initiatives seem to be bearing fruit. 

Severn Trent supplies more than eight million customers across the Midlands and water usage has risen by up to 10 per cent in some households, as people wash their hands more often and for longer. 

The company delivered a resilient trading update last week, highlighting its financial strength and commitment to both customers and staff, including 3,500 workers, out every day, making sure that everyone has access to clean water. 

Cleaning up: Severn Trent supplies more than eight million customers across the Midlands

As a utility providing an essential service, Severn Trent is better placed than many firms to withstand the impact of Covid-19. Revenue from business customers is likely to fall but 80 per cent of sales come from households and chief executive Liv Garfield is confident that results for the year will match City expectations. 

The firm is expected to pay a dividend of 100.1p for the year to March 2020, rising to 101.6p for the new financial year. 

Both payments seem reasonably secure. Severn Trent is one of the most well-respected utilities in the UK, with a strong culture among the workforce and some of the lowest water bills in the country. 

Garfield also has ambitious plans to reduce pollution, limit leakage and become carbon neutral in the next ten years. 

One of the few female chief executives in the FTSE100 index, Garfield has now been joined by a female chair, Christine Hodgson, making Severn Trent the first company among Britain’s biggest listed businesses with an all-women duo at the top. 

Midas verdict: Midas recommended Severn Trent in 2009, when the shares were £11.89, and again in July 2018, by which time the price had reached £19. 

Last week, the stock closed at £21.49, putting it on a yield of more than 4.7 per cent. 

Existing investors have been well served by this business and should stick with it. 

The shares could also tempt new buyers, in these uncertain times. 

Traded on: Main market Ticker:  SVT Contact: severntrent.com or 0371 384 2967 

 



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