Greencoat UK Wind PLC (LSE:UKW) increased its first-half dividend 13.5% on a year ago, even though low wind meant generation was below target.
A pay-out of 2.19p per share was declared for the second quarter, the same as the first, resulting in a 4.38p dividend per share for the first half of 2023, up from 3.86p a year earlier.
From its portfolio of 46 operating UK wind farms, net cash of £204mln was generated during the half-year, the investment trust said, compared to £328.8mln at the same point last year.
The portfolio generated 2,088 gigawatt hours (GWh) of energy during the period, powering 1.8mln homes and avoiding the emission of 2.1mln tonnes of CO2 per annum, the company said, although generation was 18% below budget.
A further 355 megawatts (MW) of investments are due to complete in the third quarter, including investing £444mln into London Array offshore wind farm and £320mln into South Kyle wind farm, with the former deal sealed on Monday and the latter investment agreed three years ago.
Along with the completion of the Kype Muir extension, 355MW of net generating capacity will be added to the portfolio, taking it to over 2GW.
Due to higher Bank of England interest rates, the company said it has continued to increase its discount rate and thus returns to investors, with a forecast 10% return to investors including reinvestment of excess cash generation in addition to the dividend yield.
As a result of the increase in the discount rate and lower short-term power prices, partly offset by higher short-term inflation and valuation gains from recent and committed investments, NAV decreased in the period to 165.8p per share at the end of June from 167.1p at the end of December.
Chair Lucinda Riches noted that dividends were covered 2.1 times in the period and that in the decade since its IPO, “the company has increased its dividend in line with RPI every year with excess cash generation being reinvested to drive NAV growth above RPI, now delivering returns to investors of 10%”.
The outlook, she said, is “extremely encouraging”, with the trust operating in “a mature and growing asset class and with our market leading position and self funding business model, we are well placed to capitalise on NAV accretive investment opportunities and continue delivering superior returns to shareholders”.