National Grid (LSE: NG.) shares look more expensive than they did a year ago, but that doesn’t mean they’re a bad fit for every investor.

The stock has risen 17.5% in the past year and has traded above £10 per share for more than a year, giving many value-hunters pause.

Dividends remain broadly similar to 2022 levels, so income investors aren’t seeing a big jump in yield. That begs the question: are the shares worth buying at today’s price?

Why the price rise?

A lot of the move is down to the company’s investment story. National Grid’s running what management describes as a multi‑year programme to expand the network.

Recent company commentary and press coverage reference a near‑term programme in the region of tens of billions to 2029 and beyond. This is aimed at nearly doubling parts of the transmission network to handle more power and new loads such as data centres. 

Regulators have also put in place the RIIO‑T3 price control framework that allows higher returns and therefore higher permitted revenue for transmission businesses.

CEO Zoë Yujnovich recently highlighted ongoing work to expand electricity transmission lines. She said the company is addressing £12bn in costs tied to curtailment arrangements with wind and solar developers to manage excess generation.

That goes some way to help explain why investors are willing to pay more. But will it keep delivering growth?

What the numbers say

Financially, the business appears to be doing well. Underlying earnings grew 14.7% last year, and management guidance points to earnings growth of between 13% and 15% in 2027.

But with the shares now trading on a price‑to‑earnings (P/E) ratio of 19.65, they’re higher than the FTSE 100 average.

Dividends-wise, a payout ratio of about 74% supports payments, and the company’s 32‑year track record of payments certainly adds trust. However, the yield’s near its lowest levels in five years, at just 3.8%.

Those figures show a regulated utility with steady earnings growth and a long dividend record. But with a valuation higher than long‑run averages, it seems the market’s already pricing in a lot of the growth. 

What are the risks?

Large infrastructure builds rarely come without delays or cost pressure, and higher investment also raises leverage through regulatory gearing. That can ramp up debt even if the balance sheet looks healthy today.

There’s also a real question about whether cash flow fully covers both debt servicing and dividends once the heavy capex years hit. Regulated earnings mitigate these risks to some degree, but don’t remove them altogether.

So is it still worth considering?

For someone chasing rapid growth, National Grid’s unlikely to thrill in 2026. And for income investors seeking high yields, 3.8% looks modest relative to other income options.

But for a cautious investor who wants defensive, regulated earnings, it’s still a reasonable holding to consider. That’s why I intend to keep holding the shares for years to come. The regulated model and the company’s role in the energy transition provide a strong foundation to reduce volatility in a portfolio.

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Mark Hartley owns shares in National Grid.