Greencoat UK Wind PLC (LSE:UKW) offers value for investors with resilient dividends, validated valuations and reduced gearing despite ongoing challenges in the renewables sector, said analysts at Kepler.
UKW offers strong income credentials relative to peers, they said, with dividend growth linked to inflation and a current yield well in excess of government bonds.
With 60% of revenues fixed and inflation-linked, prospective NAV total returns of 10% per annum are achievable.
Interim results for the first half of 2025 showed a dividend covered 1.4 times.
Disposals in the period demonstrated the strength of portfolio valuations, with proceeds also reducing gearing to 39.5%, below the board’s 40% ceiling, and cutting the trust’s dominant exposure to Hornsea One.
UKW’s managers project up to £1 billion of excess cash generation over the next five years, providing scope for capital allocation beyond dividends.
Buybacks remain attractive at current discounts, Kepler said, though other options may be prioritised if discounts narrow.
Risks around persistent discounts, gearing sensitivity and long-term valuation assumptions were acknowledged, but the analyst said UKW remains the largest, lowest-cost player in the sector, with a diversified portfolio and long-term appeal.