Downing Renewables & Infrastructure Trust PLC (LSE:DORE) announced an increased dividend target for the current calendar year and the acquisition of two hydropower plants for a total of £5.1mln.
The annual dividend target will increase by 7.6% to 5.38p per share, in line with the trust's progressive dividend policy and still paid quarterly in equal amounts.
It is expected to be 1.4 times covered by the current portfolio, including expected near-term acquisitions. Cash dividend cover has been calculated on a cash basis of income expected to be received by the company and its immediate subsidiary.
Paid for using available cash reserves of its Downing Hydro AB subsidiary, the two hydropower plants are both operational and located in Sweden's SE2 pricing region, in Högforsen and Gottne. Completion of the first was in February and the second is expected this month.
The acquisitions increase the total number of the trust's managed Swedish hydropower plants to 28 with a total annual average production of 197 GWh.
DORE said it has gained written confirmation from its sponsor that the terms of the transaction are fair and reasonable, as the vendor of the Gottne plant is Magnus Olofsson, who is also a director of Downing Hydro and so is a related party of the company.
Tom Williams, partner and head of energy & infrastructure at Downing LLP, the trust's manager, said he was "excited" by the potential of the acquisitions and other projects in the near-term pipeline, with hydropower "a crucial source of renewable power in the energy transition thanks to its storable quality which helps reduce price volatility and maximises the value of the energy stored for both end users and our investors".