Is Greencoat UK Wind a buy?

Greencoat UK Wind shares are up 40% in eight years. Here are a few reasons why I will be adding them to my portfolio in the coming weeks.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Undoubtedly, the IPCC report released this summer has come as a wake-up call to many. With global temperatures set to rise precipitously in the next few decades, the only reasonable course of action is for governments around the world to make the switch to renewable energy – and fast.

While we don’t know what will be said or agreed to at the COP26 later this year, investors may now find themselves in a once-in-a-lifetime position with the chance to get in on the ground floor of the green revolution before it kicks into high gear.

But where should I start? There are dozens of new companies springing up all other the world, each promising to revolutionise the energy industry with their new, fantastic technology.

One that has been around for some time, however, is Greencoat UK Wind (LSE: UKW).

What is Greencoat UK Wind?

Greencoat is an investment group that focuses on finding and funding promising wind farms within the UK. It is currently a shareholder of over 30 wind farms across the British Isles and was the first renewable infrastructure group to list on the London Stock Exchange in 2013, which makes it ancient by the standards of the sector!

Since first listing, its initial price of 120p has been on a steady incline, reaching an all-time-high of 150p shortly before the Coronavirus pandemic. Today it sits at 141p, has a price-to-earnings ratio of 13:66 and pays a yearly dividend of 5.06%. Not bad, and much better than I’ll get from a savings account.

What’s not to like?

My largest concern is less with the company or its future, but with the short term, and rising interest rates.

As always, we must be careful when investing. Situations in the market can change, both for good and ill, and many new investors – eager to get in on the action – are particularly vulnerable.

Scammers recently attempted to fool investors by claiming to offer shares in ‘Corriegarth Wind Energy’. Greencoat UK Wind does hold a subsidiary named Corriegarth Wind Energy Limited, which owns and runs the Corriegarth Wind Farm; however, it did not publicly offer any shares in the farm and has posted on its website that the authorities have been alerted.

All told, for me, there isn’t much to dislike. Despite some unfavourable net asset value (NAV) numbers, the UK Government’s recently announced pot of £265 million for clean energy companies could help to offset some of the costs of expansion, and the long-term nature of wind farm contracts allow us a glimpse into the group’s earnings over the next decade, a privilege uncommon in the world of investing.

On top of that, demand for wind energy is also likely to increase as the public puts pressure on world leaders to take significant action against the climate crisis. The UK, unlike many countries, is in a prime position to make wind power its primary energy source, as it has some of the strongest prevailing winds of any country in the world. I plan to add Greencoat UK Wind shares to my portfolio over the coming weeks. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Reynolds does not have a position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Google office headquarters
Investing Articles

$1bn a day! This S&P 500 share still looks like a stock market bargain after Q1 earnings

The owner of Google and YouTube just announced strong results to the stock market, including another massive $70bn share buyback.

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

3 cheap FTSE 100 stocks with big dividends to consider buying right now

Sector weakness in some FTSE 100 industries has also left some of my long-term favourite stocks offering attractive dividend yields.

Read more »

Growth Shares

Forecast: £1,000 invested in Rolls-Royce shares could be worth this much by next year

Jon Smith talks through both his opinion and analysts’ forecasts when trying to predict where Rolls-Royce shares could head from…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

£5,000 invested in Lloyds shares 5 years ago is now worth…

The price of Lloyds shares has more than doubled over the past five years. However, our writer’s cautious about the…

Read more »

Investing Articles

Up 58% in a year, the BT share price could be the FTSE 100 target to beat in 2025

The BT share price has been steadily climbing back since newish boss Allison Kirkby came on board. Is the new…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

£10,000 invested in Nvidia stock 5 years ago is now worth…

Even after the Nvidia stock falls of the past couple of months, its five-year performance remains stunning. And it could…

Read more »

artificial intelligence investing algorithms
Investing Articles

I asked ChatGPT for the best UK stocks to buy for my portfolio in the market sell-off. Here’s what it said

When Edward Sheldon asked the generative AI app for the best stocks to buy amid the market pullback, he was…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Could now be a rewarding moment to buy shares?

Christopher Ruane's looking for shares to buy in a turbulent market. But while he's focused on quality, he's equally interested…

Read more »