NextEnergy Solar Fund Ltd (LSE:NESF) highlighted in its first-half results that it remains on track to meet its dividend target this year, with the shares currently offering an 11% yield, well covered by earnings and cash flows.
The six months to end-September saw saw the investment trust's portfolio generate income of roughly £45 million and raise funds from its ongoing capital recycling programme, which enabled two quarterly interim dividends to be confirmed so far.
The target dividend is 8.43p per ordinary share for the financial year to 31 March 2025.
Net asset value per share stood at 97.8p at the 30 September half-year stage, down from 104.7p in March as the investment trust paid out the interim dividends and project costs, with an effect from a decline in UK power price forecasts in the period, partly offset by an asset sale and share buybacks.
The sale of a 35MW solar project for £27 million, a 14% premium, was the second phase of NESF’s capital recycling programme, with the third phase completed in the first weeks of the second half, with the sale of a 50MW solar asset for £30.3 million, representing a 21.5% premium and generating an estimated 0.92p uplift per share in NAV.
After raising £72.5 million from the first three phases, there is another 100MW in the sales pipeline that is said to be progressing.
Chair Helen Mahy said: "The company remains committed to narrowing the ordinary share discount and is focused on delivering shareholder value now and long into the future.”
Renewed political momentum towards a low-carbon energy system since the UK general election was highlighted Ross Grier, head of UK Investments at NextEnergy Capital.
“NESF's carefully curated portfolio of 102 operational solar and energy storage assets provides a strong foundation for growth, both from within the existing portfolio and from new opportunities.
"The company continues to deliver reliable returns to shareholders through well-covered quarterly dividends derived from strong cash flows. There is a lot to be positive about looking forward, with multiple political and macroeconomic tailwinds that we expect to benefit NESF, its shareholders, and the renewable energy sector as a whole.”