StockMarketWire.com - Water utility Severn Trent said it expected to raise its annual dividend at least in line with the UK inflation rate, estimated this year at around 1.5%.

The company made the decision after accepting regulator Ofwat's final determination for the AMP7 regulatory period.

Severn Trent said that based on its 2020 financial year dividend of 100.08p, its 2021 financial year payout was expected to be 101.58p, using the consumer price index, including housing costs (CPIH) of 1.5%.

Ofwat's determination included a totex allowance for the next five years of £6.8bn, in line with the company's business plan.

Additionally, the company said it remained remain on track to deliver at least £25m in customer outcome delivery incentive (ODI) net outperformance payments for the year.

That would take the total amount deferred to AMP7 revenue to at least £177m in nominal prices.

'We continue to deliver improvements in our operational water measures and the work we are doing to enhance our local environment through the Water Framework Directive is progressing well,' Severn Trent said.

'As anticipated, the significantly more stretching targets we agreed with Ofwat for our flooding measures have been challenging and we expect penalties on some of these to partially offset outperformance in other areas.'




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