The Motley Fool

Greencoat UK Wind shares: should I buy now?

Image source: Getty Images

I reckon the renewable energy sector is just getting started and I see Greencoat UK Wind (LSE: UKW) shares as a great way to play the clean tech trend.

Greencoat UK Wind shares at a glance

Greencoat UK Wind is an investment trust that solely acquires and operates UK wind farms. I like the fact that the business is simple to understand.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The company has 38 operating wind farms across the country. It has also invested in a UK wind farm that’s under development. This adds an element of construction risk.

Within the operating portfolio (by value), 70% is invested in onshore wind farms and 30% in offshore. I like that most of the assets are only up to 10 years old. This means that Greencoat UK Wind doesn’t have to worry about replacing old equipment for some time yet.

The investment trust earns revenue by selling wind energy to utility providers. I also like that these sales are usually based on contracts, which can last for decades. This means the stock can benefit from some degree of visibility over its long-term cash flows.

The UK’s goal for renewable energy

Last year, the Government announced its plans to make Britain the world leader in green energy. For me, the environment for UK renewable energy remains supportive, which should be positive for Greencoat shares in the long-term.

Following the 10-point plan laid out by the Prime Minister in November 2020, the UK is increasing its support for renewable energy. This includes boosting its efforts to buy offshore wind farms. I like that in the same month, Greencoat UK Wind announced that it had agreed to acquire a 49% stake in the Humber Gateway offshore wind farm.

The attractive dividend

Greencoat UK Wind shares offer a dividend yield of over 5%. And it aims to provide investors an annual dividend that increases in line with UK inflation.

This means in addition to some capital growth, if I invest, I could also expect a growing level of income. This is one of the reasons why I’d buy Greencoat UK Wind shares in my diversified portfolio.

What are the risks?

As with all investments, there are risks with the stock. This level of income generation is not guaranteed. There are several factors that could impact profits and hence the dividend. A reduction in government support, higher costs, low wind energy prices and competition could all impact Greencoat UK Wind.

The shares trade at a 15% premium to its Net Asset Value (NAV). This means that the investment trust isn’t cheap. But I’m not surprised given how investors have been income hungry, like me, during the coronavirus pandemic.


In September 2020, Greencoat UK Wind announced that it intends to raise capital through a share issuance programme. This will be conducted in various tranches over the next 12 months.

I should mention that the new shares will dilute the holdings of existing Greencoat UK Wind shareholders. But the the money raised will be used to pay down debt and to expand the wind farm portfolio. This in turn will diversify the overall portfolio and could make the investment trust a leading player in the UK wind energy market. As a long-term investor, this sound promising and is another reason why I’ll be buying Greencoat UK Wind shares in my portfolio.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Nadia Yaqub has no 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.