I have been saying for months that the outcome of the review by Ofwat into what the water companies can charge in the five years beginning this April, and so what dividends they can pay, would be relatively benign.
The market appears to agree. The biggest companies, United Utilities and Severn Trent, both indicated this week that they were prepared to fall in line with Ofwat’s recommendations and have set out the implications for those dividends.
This is important for the hundreds of thousands of private investors that rely on them for the guaranteed and relatively high yield they offer. In both cases, share prices rose sharply.
United Utilities announced on Tuesday, Severn Trent yesterday. Its shares jumped 19p to £21.70 and are now