A once-in-a-lifetime opportunity to take advantage of this 11% UK interest rate?
What do you say to a company that recently announced an 11% dividend? What if that represents its 12th consecutive year of profit increases? And what about the planned 3.4% increase in 2026 that is in line with CPI inflation?
No, it’s not a dream, of course Greencoat UK Wind (LSE: UKW). Renewable energy may be less efficient at the moment. But big dividend yields can’t be unpopular, right? This one is ranked in the top five FTSE 100 again FTSE 250 combined. And in my mind, it is the least dangerous among those leaders.
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What are you doing?
Greencoat is a listed real-estate investment trust (REIT). It owns and operates a number of wind farms across the UK, both onshore and offshore. And the energy produced goes to a long list of consumers through National Grid.
At the end of December 2025, the trust’s net asset value stands at 133.5p per share. That’s down from a year ago, due to a number of factors including energy prices, share buybacks, dividends, and depreciation.
But Greencoat’s share price closed at 93.45p ahead of full-year results on Thursday (February 26). It means that every £1,000 an investor puts into stocks can now buy more than £1,400 worth of property – mainly wind farms.
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But is it reliable?
Don’t like paying today’s high energy prices? Here’s a thought… If we match our annual energy bills by investing the same amount of money in Greencoat shares – we can get an effective discount of just 11% on the benefits.
But there is one common problem with a very high dividend yield like this one. They are often elongated and suggest a possible cut. And on the face of it, the risk of that seems high here. In 2025, Greencoat recorded a pre-tax loss of £193m, resulting in an underlying loss per share of 8.71p.
However, at least cash and equity rose during the year, by £8.4m to reach £14.2m. And forecasts suggest healthy earnings through 2026 and beyond, giving us a forward price-to-earnings (P/E) ratio of a low 6.5.
The company itself said “expects to continue to generate strong cash flow and dividend cover and expects to have c.£1 billion of cash from natural excess cash flow available for distribution over the next 5 years.“
Uncertainty
All these things are very uncertain. And Greencoat talks about the various possibilities of liquidation, acquisition, and debt programs. A reduction of £168m in debt principal per year was welcome, mind you.
Great political uncertainty hangs over the future of wind power as well, at least in the short term. However, the spirit of Greencoat UK only works – as the name suggests – in the UK. So it should hopefully be immune to America’s current hostility to clean energy.
Also, the low price performance – down 27% over five years – is hard to miss. Are these huge dividend payouts imminent? No, nowhere near. But I like management’s commitment to increased profitability, in addition to that excellent track record.
Definitely one that I think income investors should consider.
