Greencoat UK Wind PLC (LSE:UKW) has been left with significant surplus cash for reinvestment following its conservative approach to higher wholesale energy prices last year, according to analysts at research house Kepler.
Keeping dividend coverage at 3.2 times for 2022 while wholesale energy prices were rising, boosting revenues, should mean it has £394mln in cash to invest.
Kepler estimates net assets are up 31% in total over the full year even though it did not hedge electricity prices and they subsequently fell.
Greencoat “captured high prices during the last year but having seen electricity prices come back significantly from their highs, [its] conservative approach looks to have paid off,” analysts said.
Shares offer a potential yield of 5.4% for 2023, with a target dividend of 8.76p, in line with its remit to match dividend rises to inflation.
Greencoat is set to report full-year results, having previously highlighted a “positive” outlook, given large scale investment in European renewable energy since the Ukraine war began.
Shares were down 0.8% at 161p today, having risen 5.4% so far this year.