United Utilities Share Price Forecast June 2021 – Time to Buy UU?
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Shares of United Utilities Group PLC (LSE: UU) are in the news recently after it began trading ex-dividend in the last few days. This means that investors purchasing the shares on or after June 24th will not receive the dividend before the 2nd of August. Because of these moves, many investors are asking whether United Utilities Group is an attractive dividend stock or not.
United Utilities Group – Technical Analysis
After examining the financial statement for United Utilities Group PLC, we find a market capitalization of £6.803 billion, total assets worth £14.179 billion and total debts worth £8.452 billion. Its income statement reveals a 2020 revenue of £1.81 billion with a profit margin of 25.08%. At the time of writing, UU shares are currently worth £980.2 with a downtrend of -0.26%.
Technical indicators for United Utilities Group PLC reveal a mixed sentiment. Relative Strength Index (14)(39.1), Average Directional Index (14)(22.2), Williams Percent Range (14)(−88.5), Stochastic %K (14, 3, 3)(17.8) and most other oscillators are pointing towards neutral. Exponential Moving Average (10)(1000.8), Volume Weighted Moving Average (20)(1012.5) and most other moving averages are pointing towards a sell action.
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Recent Developments
United Utilities Group PLC recently signed an agreement with Itron Inc. to deploy the latter’s next-generation cloud-based meter management system, Temetra. This will allow the utility to read and examine almost 1.6 million meters across northwest England, improving water delivery and management. The company also selected Samotics, an AI-driven industrial analytics company for a 12-month trial to improve the efficiency and readability of its operations.
Should You Buy UU Shares?
According to information released by United Utilities Group PLC, its next dividend payment is locked at £0.29 per share. It has also paid out 65% of its earnings to investors last year, which is a health payout level for a company of this size. However, investors have to take cash flow into considerations. In United Utilities Group PLC’s case, it paid out more cash flow than it had generated at 136% last year. This can be a cause for concern for investors. So the company paid out less in dividends than it reported in profits. Since it did not generate enough cash to cover the dividend, multiple instances of this can hamper its ability to maintain its dividend.
That being said, companies that have consistently growing EPS(earnings per share) such as United Utilities Group PLC make the best dividend stocks for investors. The company’s EPS have increased by 2.7% per annum over the past 5 years. The only concern is the fact that most of the company’s cash flow was consumed by dividend payments last year.
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