Greencoat UK Wind Plc (UKW) -Increase in Annual Dividend & Commencement of Share Buyback Programme.

[idpickering]

Greencoat UK Wind PLC (the "Company" or "UKW"), the leading listed renewable infrastructure fund, invested in UK wind farms, today announces an increase in its annual dividend target to 10p and the launch of a share buyback programme of up to £100 million (the "Programme").

Background

From admission to the London Stock Exchange on 27 March 2013 to 30 September 2023, the Company has generated £1,764 million of cash flow, paid £887 million of dividends and reinvested £877 million of excess cash generation. The Company has increased its dividend in line with RPI every year and additional funds generated have been reinvested in UK wind power assets to drive NAV growth above RPI, with UKW now delivering net returns to investors of 10%, assuming shares purchased at NAV.

The Company is very well capitalised enabling UKW to benefit from its market leading position, as evidenced by the Company's recent investment in the London Array offshore wind farm.

In line with UKW's capital allocation policy, which is regularly reviewed by the Board, the Company always considers a range of options to optimise shareholder returns from its leading market position. Given continued operational strength, which the Board and Manager believe is not reflected in the current share price, the Company is launching a share buyback programme of up to £100 million and increasing the annual dividend target to 10 pence per share.

Increase in Annual Dividend

As a consequence of the Company's prospects, strong balance sheet and cash flow generation, the Board has determined it will increase its annual dividend target to 10 pence share for the 2024 financial year, an increase of 14.2% over the 2023 target dividend of 8.76p. This increase is significantly higher than forecast December 2023 RPI inflation.

In recognition of the very strong cash flow delivered by the business through 2023 to date, the Board also has decided to pay a 3.43 pence per share dividend for Q4 2023 increasing the 2023 full year dividend target to 10 pence per share.

Since listing, the Company's aggregate dividend cover has been 2.0x and the average dividend cover is projected to remain strong over the long term, whilst also remaining robust in the face of a range of extreme downside power price sensitivities. The Board expects that future dividends will continue to be increased in line with RPI, as has been the policy since IPO.

https://www.investegate.co.uk/announcem ... e-/7840038

Also posted on Company News here; viewtopic.php?p=623139#p623139

I hold these and know others hereabouts do too, so this may be of interest here.

Ian.

[Dod101]

Excellent. I bought these recently in expectation of something like this. Quite unusual for a company like this to launch a share buyback. Usually they are raising funds. Nice big increase in thedividend as well. Unlike the discussion on PHP yesterday, this company seemed awash with funds.

Dod

[idpickering]

Excellent. I bought these recently in expectation of something like this. Quite unusual for a company like this to launch a share buyback. Usually they are raising funds. Nice big increase in thedividend as well. Unlike the discussion on PHP yesterday, this company seemed awash with funds.

Dod

Thanks for your input Dod. I wish some of my other holdings behaved/performed as well as UKW. They currently make up 3.9% in capital value terms in my, still, 28 share HYP.

Ian.

[idpickering]

For what it's worth, to you guys anyway, I've set my regular monthly purchase in my ISA account held with Halifax (who're offering a no commission monthly dealing item currently) to buy more UKW on 06 Nov 23. That's the plan right now, but things might change before then? That'll put them on my max spend limit, so thereafter I'll be looking elsewhere.

Ian,

[midgesgalore]

Thanks Iain
I have held UKW since 2019, so not too long a holding history.
They continued to pay an increase in dividend throughout covid and have had a modest increase in annual dividend ever since (as measured from Q4 final to Q4 final). As a regular income investment that cannot be too bad.
The dividend increase from February 2023 to February 2024 will be 29.5% if everything goes to the new plan however it would still be a decent increase of 13.5% if UKW had stuck to the original plan of 4 x 2.19p payments. Clearly nothing to complain about.

I had an unusually larger portfolio income in August and a slightly lesser one coming up in November so I might consider increasing UKW to a full holding soon.

midgesgalore

[Gerry557]

I have lucked in for once. I added to these earlier this month. That tranche has grown it's dividend by over 14% so happy with that in this short time period.

I note the first lot, the increase is nearly 60% since 2015. I hope that's matches inflation. I expect it does and some then gets a bit sticky this last year or so but with this announcement maybe it's touch dry already.

[richfool]

I have lucked in for once. I added to these earlier this month. That tranche has grown it's dividend by over 14% so happy with that in this short time period.

I note the first lot, the increase is nearly 60% since 2015. I hope that's matches inflation. I expect it does and some then gets a bit sticky this last year or so but with this announcement maybe it's touch dry already.

Yes, me too!

Ironically, after following UKW for a long time a year or more back and feeling it was a bit too much in vogue/at a premium, at that time, and that I had missed the boat/didn't want to chase the rising SP, (so) I left it alone. (Though I did invest in other renewables, a couple of which included some wind exposure). Then very recently, noting that it was trading at a 20% plus discount, with a yield of c 5.8%, a pattern of rising dividends and a flow of good news, I jumped in and bought some at 1.32. Now, with the latest news and dividend announcement/increase, I wish I had bought more!

I'll just have to hope the SP falls back, perhaps before the next ex div date of 9th November.

[Dod101]

For once as I said earlier like richfool I seem to have got the timing right. Good and I think secure yield with the possibility of a share price increase as well. I see some of their unattractive assets blighting my view most days so it seems to make sense to at least get some financial return.
Dod

[kempiejon]

Historic yield high, good history of increasing income.
Cover 2.1 from Kepler/trustintelliegence who also said this.

Greencoat UK Wind’s (UKW) NAV per share decreased in the period from 167.1p per share on 31/12/2022 to 165.8p on 30/06/2023, reflecting an increase in discount rates and lower short term power prices offset by higher short-term inflation and valuation gains from recent and committed investments.
Operationally, electricity generation for the period was 18% below budget owing to low wind. On the other hand, thanks to continued strong electricity prices achieved and inflation linked cashflows, net cash generated by the portfolio was £204.0m, with dividend cover of 2.1x.

https://www.trustintelligence.co.uk/inv ... l-jul-2023
I think they're tame commentators,

The yield and income look a good addition to my HYP, I hold them with TRIG - The Renewables Infrastructure Group

[csearle]

For once as I said earlier like richfool I seem to have got the timing right. Good and I think secure yield with the possibility of a share price increase as well. I see some of their unattractive assets blighting my view most days so it seems to make sense to at least get some financial return.

Unlike me. I bought a full holding for my HYP on 13 April 22. Not quite at peak price ever, but not far off. C.

[Gerry557]

The good news it hasn't gone bust and you will get a bigger dividend than when you invested.


The SP might rise too if they are buying back.

Not good news if you might want to buy more.

[idpickering]

Unlike me. I bought a full holding for my HYP on 13 April 22. Not quite at peak price ever, but not far off. C.

Thanks for your input Chris. Are you going to buy more UKW, thereby lowering your average purchase price? I tend to do that generally, not just in the case of UKW, but always aware to not keep grasping at what might be a falling knife. Hence my max spend limit.

Ian.

[csearle]

Are you going to buy more UKW, thereby lowering your average purchase price? I tend to do that generally, not just in the case of UKW, but always aware to not keep grasping at what might be a falling knife. Hence my max spend limit.

Don't know yet Ian. I'll wait until 3 November, when my dividends will have accumulated sufficiently to be able to make an economic purchase. I'll then run my spreadsheet (linked to HYPTUSS), to see which share wins the top-up rankings.

As prices change all the time I don't usually bother predicting what I'll end up doing, but, since you've asked, I've just run the spreadsheet and can say that today UKW would be fifth in line to the thrown behind BLND, LGEN, RIO, and AV.

Chris
PS In my wildest fantasies I'd have automated things such that when enough dividends had accrued the top-up candidate would be selected and purchased without intervention so that my drinking of a piña colada on my island* wasn't disturbed. Other fantasies are available.

*Probably at a more southerly latitude than your island.

[Dod101]

The good news it hasn't gone bust and you will get a bigger dividend than when you invested.


The SP might rise too if they are buying back.

Not good news if you might want to buy more.

The good news is really that it is significantly increasing its annual dividend and can afford a significant share buyback. That is most unusual for this sort of company. Usually they are fund raising not distributing. In normal times that would surely have put a rocket under the share price.

Dod

[idpickering]

Don't know yet Ian. I'll wait until 3 November, when my dividends will have accumulated sufficiently to be able to make an economic purchase. I'll then run my spreadsheet (linked to HYPTUSS), to see which share wins the top-up rankings.

As prices change all the time I don't usually bother predicting what I'll end up doing, but, since you've asked, I've just run the spreadsheet and can say that today UKW would be fifth in line to the thrown behind BLND, LGEN, RIO, and AV.

Chris
PS In my wildest fantasies I'd have automated things such that when enough dividends had accrued the top-up candidate would be selected and purchased without intervention so that my drinking of a piña colada on my island* wasn't disturbed. Other fantasies are available.

*Probably at a more southerly latitude than your island.

Thanks for your input Chris. I did mention further up this thread that UKW were in my frame for early Novenber 23, but that might change nearer the time, that being before 06 Nov 23, the scheduled investment day. We'll see.

Ian.

[spiderbill]

I purchased them in five tranches between Sept 2020 and Oct 2022 at an average price of just over 133p so despite the disappointing fall from it's high of around 165p I'm still in marginal capital profit and the dividends have been nice and steady, so this news is most welcome. (especially considering the carnage elsewhere, particularly REITs, this year.)

Currently makes up 3.7% of my shares portfolio and 3.4% of my income from that. If I had sufficient divis built up in either of my ISA accounts I'd be looking to buy more at the current price, but neither will be at a decent level for a few months, having recently bought some Glencore, and living abroad I can't put in any new money. However I'm considering whether it might even be worth buying some more outside tax protection.

The only other alternative would be top-slicing some BAE Systems which I've been letting run until now and using that.

Spiderbill

[funduffer]

In case you missed it, UKW have just announced a very large increase in dividend of 3.43p per share, payable on 29 Feb 2024.

https://www.investegate.co.uk/announcem ... nt/8011186

The dividend this time last year was 1.93p, so this represents a 78% increase.

This, at a time when a share buy-back programme is also underway.

Another of my holdings awash with cash it seems.

FD

[clissold345]

In case you missed it, UKW have just announced a very large increase in dividend of 3.43p per share, payable on 29 Feb 2024.

https://www.investegate.co.uk/announcem ... nt/8011186

...

Here'a a quote from the RNS: "As previously announced on 26 October 2023, the Company will pay a quarterly interim dividend of 3.43 pence per share with respect to the quarter ended 31 December 2023 and has increased its target dividend for 2024 to 10 pence per share, increased above the Retail Prices Index for December 2023."

10 pence with respect to 2024 would be an average dividend of 10/4 = 2.5p per share. The dividend with respect to 2023 was 10p.

[johnstevens77]

And very nice too!

john

[Dod101]

But there is nothing new in this announcement. The 2023 target was 8.76p. The Q4 dividend was increased to bring the dividend for 2023 up to 10p. This was of course announced back in October 2023. Good news.
Two days ago they confirmed that and said that their target dividend for 2024 is10p per share.At least that is how I read it all. That would be no increase over 2023 as far as I can see.
Dod