Equities analysts at Liberum see a decent buy opportunity in renewable energy investment company NextEnergy Solar Fund Ltd (LSE:NESF) (NESF).
The FTSE 250 constituent dished out a well-covered dividend yield of 8.3% in the latest financial year, “which is among the highest in the energy transition funds sector”, said analysts.
NESF has reinforced its dividend policy for the year ahead, reconfirming an 8.35p target in today’s earnings call, marking an 11% year-on-year increase.
Liberum forecasts a 4.1% growth in NESF’s per-share net asset value (NAV), a modest sum given inflation assumptions are less conservative than peers, a challenging ancillary services market, and pressure on discount rates in a “higher for longer” interest rate scenario.
“However, in the medium term the capital recycling programme, announced last month, should provide the potential for accretive NAV growth and we retain our buy recommendation and 125p target price based on the large discount and attractive well-covered dividend yield,” stated analysts.