United Utilities performs for income investors

As United Utilities report trading in line with expectations Graham Spooner, investment adviser at The Share Centre, explains what this means for investors.

"United Utilities has announced sound progress for the period to 21 July with revenues increasing by 4.5% due to the regulated price increase. However inflationary cost pressures have offset this increase. The company is confident that it has a good financial position and expects to continue to progress well despite ongoing cost pressures.

"The sector is known to suit income seeking investors and although the dividend is down 12.5% on the previous year to 30p per share, they will be pleased to see the company plans to continue to pay a dividend 2% above inflation rates.

"United Utilities' efficiency initiatives are performing well and the outlook for the company is positive as it continues to focus on its water business and improve operational performance. The sector has been given a boost by recent corporate activity as Northumbrian Water is currently subject to a takeover offer. The interest generated on the back of this bid has helped to establish valuations in the sector and therefore we continue to recommend investors ‘hold' Untied Utilities for now."