Before today (11 March), NextEnergy Solar Fund (LSE:NESF) sported a mammoth 15% yield. But that level of income proved to be a shimmering desert mirage as the solar energy investment trust just announced a massive cut to its payout.

As I write, the share price is down 13%, so investors haven’t reacted well to the news. It leaves the stock, which was relegated from the FTSE 250 last year, 61% lower than in September 2022.

Yet, NextEnergy Solar Fund is targeting a FY26/27 dividend in the range of 4p to 4.6p per share. At the current share price of 47p, that suggests a yield of at least 8.5% (and possibly over 9%).

So, might this be a high-yield stock to add to my income portfolio this month?

Strategic reset

At the end of 2025, NextEnergy Solar Fund had 101 solar assets primarily in the UK and Italy, as well as one energy storage asset.

Like many renewable energy trusts, it has been hit hard by the higher interest rate environment. This has made servicing its debt more expensive and cut the present value of cash flows from its solar farms.

Today, the fund announced a strategic reset to try and deliver better shareholder results. The headline change is that it will transition from a progressive dividend policy to one that targets a 75% distribution of operating free cash flows (after debt servicing and fund operating expenses).

This will free up approximately £40m over the next five years to increase debt repayments and offer flexibility to support future growth opportunities. It plans to reduce the debt level to between 40% and 45% of total assets.

Other long-term goals include:

• Provide shareholders with a total return of 9% to 11%.
• Restart net asset value (NAV) growth.
• Initiate regular capital recycling for reinvestment (sell old assets to buy higher-yielding new ones, basically).
• Repower existing assets by using new solar technology to increase power output.
• Increase energy storage assets to 30% of the portfolio.

Investing more in energy storage assets should help, as these can make a higher profit than solar alone. It would also help diversify the portfolio.

When co‑located with solar, energy storage can optimise generation to align with demand, unlock additional revenue streams, and materially strengthen project economics by maximising the value of existing grid connections, which remain a critical constraint in the current market.
NextEnergy Solar Fund

Political risk

There are things to like beyond the massive forecast yield. The government’s Clean Power 2030 mandates a tripling of solar capacity to 50GW, as well as a four-fold increase in energy storage. So the current backdrop for sector growth is very supportive.

However, I also think there’s significant political risk here. Recently, the government changed how green subsidy payments were linked to inflation, which was essentially a pay cut for renewable energy companies.

Plus, Reform UK has said that if elected in 2029 it will impose windfall taxes on the renewable sector. While this may never come to pass, it does introduce an uncomfortable level of political risk, in my opinion.

Therefore, while investors might want to take a closer look, I see safer dividend stocks elsewhere for my ISA today.

The post This ultra-high-yield UK stock just cut its dividend by 50%! Time to buy? appeared first on The Motley Fool UK.

With this in mind, here are three stocks with a yield above 10% to consider.

Henderson Far East Income: 10.2% dividend yield

Investing in emerging markets can sometimes be a bumpy experience. Political and economic conditions in regions like Asia can be volatile, impacting returns.

This hasn’t stopped Henderson Far East Income (LSE:HFEL) delivering large and growing dividends over time, though. Cash rewards have grown each year since the mid-2000s.

This reflects the investment trust‘s decision to prioritise passive income over growth. It’s also due to its wide range of holdings spanning different sectors and parts of the Asian continent. This diversified approach provides a smooth return over the economic cycle, and protects investors from weakness in specific industries and regions.

In total, Henderson Far East Income has holdings in 71 highly cash generative businesses. These include companies with enormous dividend yields like China CITIC Bank, Telkom Indonesia, and Evergreen Marine Corp Taiwan.

Roughly 58% of the trust’s assets are currently located in China, Hong Kong, and Taiwan. This leaves it vulnerable to current tough conditions in the region’s largest economy. But it could also help it outperform when the Chinese economy rebounds.

Global X SuperDividend ETF: 10% dividend yield

The Global X SuperDividend ETF (LSE:SDIP) offers similar diversification benefits that reduce risk and can enhance long-term returns.

This exchange-traded fund (ETF) also focuses on high dividend yield businesses across sectors, but does so with a more global flavour. US shares make up its largest single weighting, at 26% of the portfolio. Other well-represented countries include Brazil, Hong Kong, and the UK, providing investors with the stability of developed markets and the growth potential of emerging regions.

In total, Global X SuperDividend has 106 different holdings, including popular FTSE 100 stocks M&G and Phoenix.

Be mindful, though, that a high weighting of financial services stocks may impact performance during economic downturns.

NextEnergy Solar Fund: 13.8% dividend yield

Renewable energy producers like NextEnergy Solar Fund (LSE:NESF) can be among the most stable dividend shares out there.

Electricity demand remains pretty inelastic across the economic cycle, giving predictable cash flows across the economic cycle. Profits can dip during periods of unfavourable weather, but largely speaking these companies are pretty reliable for passive income.

NextEnergy holds particular appeal for me given weather-related uncertainties. It has 101 solar assets spread across nine countries, a diversified footprint that helps compensate for poor conditions in certain places.

This has supported consistent growth in annual dividends since NextEnergy listed in 2014. Encouragingly, the investment trust is increasingly focusing on battery storage to diversify revenue streams and further reduce the weather factor, too.

The post Fancy a 10%+ dividend yield? 3 passive income heroes to consider appeared first on The Motley Fool UK.

Obviously, not all of these passive income opportunities will turn out to be winning investments. But every once in a while, it’s possible to discover a hidden gem that other investors have overlooked.

So for investors considering snapping up some FTSE 250 dividend stocks today, how much money do they need to invest to start earning a £5,000 passive income?

Crunching the numbers

Right now, the FTSE 250 index as a whole offers a total average yield of 3.4% – slightly higher than the FTSE 100. That means any investor relying on index funds will need to have a total of £147,059. But for stock pickers, the capital requirements might be significantly less.

Take NextEnergy Solar (LSE:NESF) as a prime example to consider. The renewable energy enterprise currently has the largest yield in the index at 12.7%! At this rate of payout, the amount of capital needed to earn £5,000 passively drops to just £39,370. That’s still a pretty chunky lump sum, but it’s far quicker to build up with compounding compared to almost £150,000.

Yet, sadly, high yields aren’t guaranteed. And if NextEnergy can’t maintain this generous dividend scheme, buying shares today could lure investors into a trap that destroys wealth rather than creates it. With that in mind, let’s take a deeper dive into the FTSE 250 business.

Investigating the yield

When it comes to dividend sustainability, NextEnergy Solar has quite a favourable business model. The group owns and operates a diverse portfolio of solar farms based mainly in the UK. These assets generate clean electricity, which is sold to the energy grid, generating a recurring inflation-linked revenue stream.

Having said that, solar farms only generate electricity when the sun’s shining. So far in 2025, the weather’s been quite favourable, resulting in above-budget energy generation. But that’s not always the case, and it remains a perpetual risk that investors must consider.

Nevertheless, even with this constant fluctuation, management’s prudent approach to capital allocation has translated into 10 years of continuous dividend hikes. And looking at the latest operating update, the company’s aiming to maintain the current shareholder payout at 8.43p per share.

In other words, so long as there aren’t any unexpected surprises, today’s double-digit yield looks like it’s here to stay. But if that’s the case, why aren’t more investors capitalising on this passive income opportunity?

What could go wrong?

Investor sentiment surrounding renewable energy stocks in 2025 is pretty weak. Like many of its peers, NextEnergy Solar has a chunky 48.5% gearing ratio driven by a high debt burden and preference shares. And in a higher interest rate environment, that can be problematic.

So far, that’s still manageable. But with long-term forecasts pointing towards a downturn in energy prices, dividends may have to be sacrificed to keep its financial obligations under control. Therefore, this isn’t a FTSE 250 stock I’m rushing to buy right now. Instead, my focus is on other investing opportunities.

The post How much do you need to invest in the FTSE 250 to aim for a £5,000 passive income? appeared first on The Motley Fool UK.

In fact, equally splitting £5,000 across these two stocks unlocks a combined yield of 10.9% – enough to start earning £545 passively overnight. But is this actually a good idea?

The bull case

With both businesses focused on investing in renewable energy assets and using the cash flow to pay an inflation-linked dividend, the appeal for investors is clear. Electricity demand is rising exponentially, resulting in a continuous stream of energy income to cover both debt interest and dividend payments. In fact, the dividend coverage ratios for both these stocks currently sit comfortably above the all-important level of 1.0.

NextEnergy Solar and Foresight Solar both have diversified portfolios of renewable energy assets spanning Britain, with the latter also investing internationally in markets including Spain. And with government policy pushing the energy sector towards Net Zero, the bountiful subsidies are providing strong support to fuel long-term growth.

Pairing all this, with both dividend shares trading at double-digit discounts to their net asset value, a seemingly lucrative buying opportunity has emerged for value as well as income investors. This valuation discount, paired with continuous dividend payments, is why the yield’s so high today. But why aren’t more investors taking advantage?

Risk versus reward

No investment is ever risk-free. And while renewables may sound like a safe and reliable bet for passive income, there are looming headwinds that could create problems for the sector in the future. The most prominent of these is the expected decline in long-term power prices.

With energy grids being modernised, the supply of energy is on track to rise, putting downward pressure on electricity prices. While that’s good news for consumers, it creates challenges for energy generators like NextEnergy and Foresight.

After all, unless these lower prices are offset by higher energy production volumes, the cash flow for both businesses will eventually decline, hurting the dividend coverage ratio. Even if the companies boost their solar capacity, there remains the continued risk of unfavourable weather, potentially causing energy generation to come in under budget.

Needless to say, there’s a lot of external uncertainty surrounding these dividend shares and the wider renewables sector in general. That’s why many green energy stocks currently offer such impressive yields.

The bottom line

While the risks are significant, their management teams aren’t blind to them. Strategic divestments and reallocation of capital to reduce debt burdens are already under way to alleviate existing pressure on shareholder payouts. In the short term, this introduces execution risk. But in the long run, if successful, these moves should ultimately help support sustainable passive income.  

There’s no denying, investing in these shares comes with a high level of risk in 2025. In fact, that’s why the yields are so high. But with the double-digit yields still being covered by existing cash flows, these investments may be worth deeper investigation.

Don’t forget, the most unpopular investments can sometimes be the most lucrative in the long run.

The post Investors with £5,000 in these UK dividend shares are earning a yield of… appeared first on The Motley Fool UK.

Euro star

The Schroder European Real Estate Investment Trust (LSE:SERE) lets out offices, retail spaces and other properties in major European cities. This doesn’t make it immune to risk — indeed, Germany’s struggling economy remains a threat. But its multi-country footprint helps reduce geographical risk over the long term.

In fact, this investment trust has proved extremely resilient despite recent economic pressures. Property occupancy was a robust 95% in the six months to March. And rent collection was 100%. This reflects in large part its focus on quality properties in economic hotspots such as Berlin, Paris and Hamburg.

This robustness is also thanks to its determination to capture locations with strong demographic, technological and infrastructure dynamics. It’s strategy of targeting what it calls ‘winning cities’ is also one I believe sets it up well for long-term earnings growth.

As I’ve explained, REITs like this aren’t without their risks. But sector rules mean they can still be an excellent source of dividend income over time.

These investment trusts don’t pay a penny in corporation tax. In exchange, they’re obligated to pay a minimum of 90% of annual rental earnings out in the form of dividends. It doesn’t guarantee a large and/or growing dividend year after year. But it prevents the company’s management from retaining too much income, making dividend growth more likely.

Today the Schroder European Real Estate Investment Trust carries a 7.6% forward dividend yield. That towers above the FTSE 100 average of 3.2%, to put that into perspective.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Green option

Renewable energy stocks are under growing threat from changing political thinking around climate change. In late August, Danish energy company Ørsted‘s shares slumped to all-time lows, for instance, after the White House halted work on a new US wind farm project.

Yet despite such dangers, I don’t think investors should consider avoiding the sector. There are still great opportunities out there, such as NextEnergy Solar Fund (LSE:NESF), which has roughly 100 solar projects on its books. By focusing on European countries like the UK, Italy, Spain and Portugal, it operates in regions where political attitudes towards green power are far more supportive.

In Britain, for instance, the government is looking to supercharge solar capacity from 18GW today, to at least 45-47GW by 2030. The UK is this trust’s core market, and home to roughly 85% of its total projects.

From an income perspective, I like the fact that NextEnergy operates in a highly defensive sector. Electricity demand remains broadly constant across the economic cycle. And so the trust has enjoyed the reliable cash flows to help it regularly raise annual dividends.

They’ve risen every year since NextEnergy was created in 2014. And payouts are tipped to grow again this year, resulting in an enormous 12% dividend yield. I think it’s another great long-term dividend option to consider.

The post 2 first-class REITs and investment trusts to consider for a long-term passive income! appeared first on The Motley Fool UK.

NextEnergy has lifted its annual dividends every year since floating in 2014. And forecasts show it edging up to 12.3% by 2027.

Future dividends can’t be guaranteed. And the high yield is partly due to a 34% share price fall over the past five years. I can see a few possible reasons for that.

Shifting sentiment

Enthusiasm for alternative energy stocks has worn off in the past couple of years. Did they get a bit too hot in the days when stories of anti-oil protests filled the headlines?

Is it a sentiment shift away from stocks like this in the face of political change? It’s fashionable to support hydrocarbon energy once more. And while NextEnergy has fallen, BP and Shell have climbed back — up 57% and 141% in the same five years.

Do renewable energy firms face genuine new challenges? The US now has a president who appears actively opposed to clean energy. He just blocked work on the Revolution windfarm off the coast of New England, plunging the developer — Danish energy firm Ørsted — into crisis. Wherever we look, governments have been shelving their once-ambitious zero-carbon targets.

It’s surely a combination of all of this.

Contrarian opportunity

Oil investors — including billionaire investor Warren Buffett — were contarians back in 2020. And look how well they’ve done going against market sentiment.

Do those of us who still see long-term profit potential from wind and solar energy — who are clearly now the contrarians — have an attractive buying opportunity today? I think we might.

If we invest in NextEnergy Solar Fund, we need to understand what we’re getting. The company invests in solar power plants and earns revenue from the sale of electricity.

So we, as shareholders, get a stake in what it owns. Right now, NextEnergy shares are selling at a discount to net asset value of an estimated 25%. So we can bag a share of those power assets for 75% of their stated market value.

Bottom line

Assets are one thing, but operational success is another. And June’s full-year results statement was a bit disappointing in one way. It focused mostly on asset values (which all look good to me). And on dividends, with the full-year 8.43p per share up just 1% on the previous year’s 8.35p.

But we saw income fall from £80m the previous year, to £73m. And the company is targeting another 8.43p dividend for the year to March 2026 — no increase for the first time.

I think we could be looking at a few potentially tight years now. And there has to be a danger of a dividend cut in the near-term, regardless of what forecasters say. But I see plenty of room for that while still maintaining a high yield.

For investors with a long-term view who see undervaluation here, I think NextEnergy is definitely worth considering.

The post This FTSE 250 stock offers a huge 12% dividend yield. Can we afford to miss it? appeared first on The Motley Fool UK.

Here are three top FTSE 100, FTSE 250 and small-cap shares I’m currently thinking about adding to my ISA.

A top REIT

I already own several real estate investment trusts (REITs) in my portfolio. These include Primary Health Properties, which owns and lets out GP surgeries, and care home operator Target Healthcare REIT.

Alternative Income REIT (LSE:AIRE) is another such investment trust on my radar.

These property investment trusts must distribute 90% of annual rental earnings to investors. This specific one is in my sights because of its giant forward dividend yield. At 9.2%, it’s the highest-yielding REIT on the London stock market.

This share has exposure to more cyclical sectors like retail, leisure and industrial. As a consequence, it faces the threat potential rent collection and occupancy problems during downturns.

However, it also has its tenants tied down on long contracts to mitigate this risk — the weighted average unexpired lease term was 17.5 years as of March. And it has some exposure to defensive sectors like healthcare and residential to further reduce the possibility of such issues.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Growing passive income

F&C Investment Trust (LSE:FCIT) doesn’t have the heavyweight dividend yields of that small-cap REIT. For 2025, the yield sits at only 1.4%. But what it does have is one of the strongest records of payout growth on the FTSE 100.

Annual dividends have risen consistently for the last 53 years. With the trust also trading at a 7.6% discount to its net asset value (NAV) per share, you may understand why it’s on my watchlist.

With investment in more than 400 companies, it provides excellent diversification that reduces risk and provides consistent passive income across the economic cycle. To give you a flavour, some of its largest holdings include Nvidia, Microsoft, Mastercard and Walmart.

F&C’s global footprint means performance is vulnerable to adverse currency movements. But I also like the fact this means it isn’t reliant on one region to drive returns.

Double-digit dividend yield

Today NextEnergy Solar Fund (LSE:NESF) offers an attractive blend of dividend growth and market-beating yields.

Annual payouts have risen every year since the fund listed in London in 2014. Its 11.4% forward dividend yield is also the best on the FTSE 250 mid-cap index.

Profits at renewable energy stocks depend heavily on weather conditions. When the sun doesn’t shine, power generation at this particular stock can disappoint. However, NextEnergy’s wide asset base that spans Europe helps reduce (if not totally eliminate) this risk.

Today this dividend stock trades at a 21.8% discount to its NAV per share. I think it could be a great way for me to target a cost-effective passive income.

Now all I have to do is make up my mind!

The post 3 hot dividend stocks I’m considering for a Stocks and Shares ISA! appeared first on The Motley Fool UK.

A 75p dividend stock

The stock in focus today is NextEnergy Solar Fund (LSE: NESF). It’s an investment company that focuses on solar energy and energy storage infrastructure (and is currently invested in over 100 assets).

Its objective is to provide shareholders with attractive returns, predominantly in the form of regular dividends. Listed on the London Stock Exchange‘s main market, it currently trades for just 75p.

A huge yield

Now, analysts’ dividend forecasts are not always accurate. And dividend payments are never guaranteed, of course.

However, for the year ending 31 March 2026, City analysts expect this stock to pay out 8.5p per share in dividends. That translates to a yield of a massive 11.3% at today’s share price of 75p, so this stock could be a cash cow.

Lots to like

Looking beyond the enormous yield here, there are several things to like about NextEnergy Solar Fund from an investment perspective, in my view.

For a start, the company’s operating in growth industries. According to Mordor Intelligence, between now and 2030, the UK solar industry is set to grow by around 19% a year. The UK energy storage market’s projected to grow at an even faster pace, with several research firms forecasting growth of around 35% a year between now and 2030. This market growth should provide a supportive backdrop for the company.

Secondly, the fund benefits from government support. In its most recent trading update, it said the majority of its long-term cash flows are inflation-linked via UK government subsidies.

Third, it’s currently trading at a significant discount to the net asset value (NAV) of its assets (meaning there could be some value on offer). At the end of June, the NAV per share was 95.1p – about 27% higher than the current share price.

Finally, the fund could be set to benefit from lower interest rates. If rates were to come down, it would most likely be looking at less interest on its debt (debt’s used to fund solar farm projects).

Worth a look?

There are plenty of risks here, of course. Dividend risk is one. Recently, dividend coverage (the ratio of earnings to dividends) has been quite low, meaning that in the years ahead, there’s a chance of a lower-than-expected payout.

Share price risk is another. Recently, sentiment towards clean energy investments hasn’t been great and this may persist.

Interest rates are also worth mentioning. If they were to rise from here, it could put pressure on profitability and impact dividend payments. However, I like the story. I think this stock’s worth considering for income as part of a diversified portfolio.

The post Meet the 75p dividend stock with a higher yield than Legal & General shares appeared first on The Motley Fool UK.

There are only two UK stocks within the FTSE 100 or FTSE 250 with a yield over 10%. This isn’t surprising, as sustaining a yield this high for a company over a long period is exceptionally challenging.

I decided to dig deeper into one of the stocks to see if I believe it to be viable.

Operations aid income payments

I’m referring to the NextEnergy Solar Fund (LSE:NESF). As the name suggests, it’s a renewable energy investment fund that focuses primarily on owning and operating a portfolio of solar assets. These solar farms generate electricity, which is then sold either under long-term power purchase agreements or into wholesale electricity markets.

This business model has proven to be profitable, and it’s not hard to see why. Many of the UK solar assets benefit from government-backed subsidies, which guarantee above-market prices for electricity over long periods. This provides predictable, inflation-linked cash flows.

In my view, that’s the main reason why it’s so appealing for income investors. It hasn’t only a strong track record of paying out income, but being able to increase the dividend per share year-on-year.

Over several years, this really makes a difference. For example, back in 2021, the total dividend per share was 7.05p. In the latest year, this has risen to 8.43p.

Looking at sustainability

Part of what can push a yield higher is a falling share price. This serves as a red flag, as it indicates problems at the company that could lead to further dividend cuts down the line. For NextEnergy, the stock’s down 8% over the past year.

One reason for this is concern from investors that interest rates might stay higher for longer. This is due to inflation in the UK rising, with the latest June reading of 3.6% the highest level in over a year.

The fund uses debt in order to fund solar farm projects. As a result, interest rates play a big role in ongoing financing costs. Shifting expectations of the future interest rate path mean expenses might not fall as previously planned, a concern that has caused the stock to dip.

Even with this concern, I don’t see it as a sufficient reason to think the yield’s under threat of falling suddenly. The dividend cover is 1.2, with anything above one indicating the current earnings fully cover the current dividend per share.

If anything, the risk I see is that the yield could fall, triggered by the stock rising in value. If the stock value increases faster than the dividend per share, the yield will decrease. Therefore, it provides me with some urgency to actually buy the stock.

I’m seriously thinking about adding it to my portfolio, to benefit from the elevated yield.

The post Can this UK stock sustain the current 11.14% dividend yield? appeared first on The Motley Fool UK.

NextEnergy Solar Fund‘s (LSE:NESF) one such enterprise with its shares trading close to a 20% discount to its net asset value, offering a staggering 11.5% yield. Yet despite this pessimism, the share price has actually been on the rise this year, climbing by 11% and outpacing many of its peers.

So is this just a short-term rally? Or are we looking at the start of a long-awaited rebound?

The bull case

As the name suggests, NextEnergy Solar focuses on investing in utility-scale solar energy infrastructure. The bulk of its asset portfolio consists of UK solar farms with some European exposure, totalling an 865 megawatt energy-generating capacity. For reference, that’s roughly enough to power 330,000 homes.

The business model’s simple. Generate clean electricity and sell it to the grid. The continuous need for electricity makes for a highly recurring revenue model that’s translated into relatively stable cash flows.

As with many renewable energy enterprises, the weather can slow things down. Yet, prudent capital allocation has enabled management to continuously hike dividends every year for the last 10 years, staying ahead of inflation. And even with the headwinds of falling electricity prices, the company’s robust cash coverage indicates that payouts will continue to flow to shareholders.

Dividends for its 2024 fiscal year totalled 8.43p. If the latest analyst forecasts prove accurate, that’s expected to increase to 8.68p by 2027. The growth rate’s hardly phenomenal. But with the yield already in double-digit territory, there remains a potentially lucrative income opportunity here. Even more so as the UK strives towards a Net-Zero energy grid by 2030.

What could go wrong?

If the extraordinary 11.5% dividend yield’s here to stay, why aren’t more investors rushing to buy shares? We’ve already touched on it – energy prices. While energy inflation’s certainly wreaked havoc on many households lately, the long-term trends suggest that electricity’s on track to get steadily cheaper over the next 20 years.

That’s great news for consumers, but less so for energy generators who operate with a lot of fixed costs. Lower prices mean less profit, which could eventually compromise dividends. And with just shy of £200m of debts and equivalents on its balance sheet, it could force management to sell off some of its assets at their currently discounted prices to cover upcoming loan maturities.

Pairing all this with the ever-increasing erratic behaviour of the weather results in a lot of uncertainty – the bane of the investing world.

The bottom line

All things considered, few income stocks can boast of their ability to maintain double-digit dividend yields. However, the lack of projected growth does give me pause. Even more so when considering other renewable energy firms like Greencoat UK Wind are preparing to ramp up their dividend rather than keep it stable.

With that in mind, I’m personally not rushing to buy. But that doesn’t mean the stock isn’t worthy of a closer look from opportunistic income investors.

The post An 11.5% yield?! Here’s the dividend forecast for a hot income stock appeared first on The Motley Fool UK.