Foresight Environmental Infrastructure (LSE:FGEN) has confirmed it will stick to a long-term investment strategy focused on core infrastructure assets, even after a muted start to the year and growing scrutiny of income-focused funds.
Net asset value (NAV) dipped 0.8% in the first quarter, reflecting weaker-than-expected wind and solar generation, as well as an unplanned outage in Italy.
But dividend cover rose to 1.32 times, near the top of the target range, and the payout is being raised 2% to 7.96p for the next financial year, offering a 10.4% yield based on the current share price.
Stifel analysts noted that the drop in NAV was less severe than for many renewable peers, thanks to lower exposure to falling power price forecasts.
They welcomed management’s decision not to pursue a wind-down or large-scale asset sales, instead focusing on maturing growth investments such as food waste plants and compressed natural gas refuelling infrastructure.
A planned change to the fee structure, partially linking charges to market capitalisation rather than NAV, should cut costs by £800,000 a year. The ongoing buyback programme, extended by £10m, also provides some support for the share price.
Foresight’s steady-as-she-goes approach may lack excitement, but it avoids the upheaval seen elsewhere in the sector.
The shares were steady at 77.68p.