NGGTF - PPL Corp.: Substantial Dividend Cut Is Plausible

• Broadening my exposure to regulated utilities, I initiated a position during the March 2020 rout that I exited later in the year due to suspected regulatory headwinds from the UK.
• Hence, the sale of PPL’s UK division got me interested again, especially since it came with a substantial deleveraging.
• It appears that the UK division was sold for a weaker EV/EBIT multiple than what is going to be paid for Narragansett Electric Co.
• Investors are now looking at a financially sounder balance sheet, but the company’s earnings will suffer, putting the juicy dividend in jeopardy.
• I outline why I believe that a dividend cut to USD 0.86 is plausible.

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