The heat is on for energy firms as high prices send profits soaring

theguardian.com:

Hapless bloke in cream woolly jumper and 1980s moustache dashes out of the village pub, knocks over a postman on a bicycle, and enthusiastically endorses British Gas shares. This much-remembered scene came from the 1986 Tell Sid TV advertising campaign, which encouraged the public to buy into the energy supplier’s privatisation, and its echoes will reverberate this week.

British Gas owner Centrica will on 28 July announce its results for the first half of the year. It’s a critical day in the energy industry, with oil behemoth Shell revealing its second-quarter numbers, and National Grid planning to publish its initial outlook for winter electricity supplies.

Centrica’s crunch dividend decision could take centre stage. For the 500,000 or so remaining small investors who bought in at the time of the Tell Sid campaign, the company has built a reputation as a reliable dividend payer.

However, the payout has become less dependable in recent years. In 2019, former boss Iain Conn cut the dividend after the introduction of the energy price cap, and in 2020 the divi was suspended to preserve cash in the early stages of the pandemic. Then, in February, the firm announced soaring profits, paid back £27m in furlough funds and new boss Chris O’Shea waived his £1.1m bonus while indicating that the dividend was on its way back.

But rising bills and a cost of living crisis mean paying out cash to shareholders risks a public blacklash.

City analysts appear confident that the payout will now return at some level. Deepa Venkateswaran, senior analyst at AllianceBernstein, predicts that the company will offer a “modest” dividend of around 3p a share this year, worth about £175m.

She said: “Paying a dividend now is much less controversial than it