FTSE 250 dividend share Greencoat UK Wind (LSE:UKW) owns investments in a portfolio of 49 wind farm assets with a generating capacity of 2GW. As important as this might be, this doesn’t make it sound like the most exciting business in the country.
And yet based on its target dividend for 2026, its shares are currently (4 November) yielding 8.9%. For context, there are only seven on the FTSE 350 offering a better return. Does this make it a top income share to consider? Let’s see.
Nothing complicated
The investment trust has a simple objective: “Provid[ing] investors with an annual dividend that increases in line with CPI (Consumer Prices Index) inflation while preserving its long-term value by reinvesting surplus cash flow”.
In fact, it’s hoping to pay a dividend of 10.7p this year. If it does, it’ll be the 13th consecutive year of an inflation-linked increase.
Admittedly, some of its impressive yield can be attributed to a disappointing share price performance. Since October 2021, its market-cap’s fallen 16%. However, there’s some evidence that investors are warming to the stock. Since reaching a 52-week low in February, it’s risen by nearly a third. Those who invested at the time were looking at a yield of 11.6%.
What’s going on?
Despite this mini rally, the stock’s trading at a 10.5% discount to its net asset value (NAV). At 30 June, its audited NAV per share was 134.1p. Today, the group’s shares are changing hands for 120p.
Why such a discount? Some of the differential is explained by the higher interest rate environment that’s resulted from post-pandemic inflation. With debt of £2.07bn, the group’s earnings are vulnerable to higher borrowing costs.
Proposed changes to government policy, including cuts to the level of subsidies paid to wind farm operators, are also causing uncertainty.
However, despite these challenges, the group’s assets are performing well at the moment. During the first half of 2026, generation was 4.9% higher than budgeted. Even better, realised prices exceeded forecasts. As a result, the group hopes to produce net cash towards the top end of its £350m-£410m guidance for the full year.
When electricity prices are close to historical norms the returns on offer from Greencoat UK Wind have been described by one broker as “attractive”. Moreover, investing in the trust could also be a hedge against future energy price rises. Under these conditions, the trust’s likely to generate higher returns, which could be used by an investor to offset the impact of higher fuel costs elsewhere.
Final thoughts
In my opinion, I think Greencoat UK Wind could be considered by those investors looking to add a high-yielding share to their portfolios. The wind usually blows and with UK electricity demand expected to double by 2050, it’s clearly operating in a growth sector.
Having said that, there’s another interesting dividend share that’s also on my radar for when I’m next in a position to invest…
What income stock do we like better than Greencoat Uk Wind Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
James Beard does not hold any positions in the companies mentioned.
