One dividend stock in my portfolio that still looks good value today is The Renewables Infrastructure Group (LSE: TRIG). It’s a FTSE 250 investment trust with a portfolio of green energy assets.
After falling 16% in the past year, the stock is priced at a little over £1.01 per share. Therefore, I could pick up 493 shares with £500 right now (excluding stamp duty and platform fees).
A diverse portfolio
TRIG (as it’s commonly known) is invested in over 80 assets across the UK and mainland Europe that generate electricity from renewable energy sources.
These are mainly onshore and offshore wind farms, but it also has solar and battery storage assets.
Some of its larger projects include Hornsea One, the giant wind farm off the Yorkshire coast in which it has around a 10% interest, and the Jädraås onshore wind farm in Sweden.
It estimates its portfolio is capable of powering the equivalent of 1.9m homes.
I like the diverse assets here. As the fund points out, this reduces “the risk from over-concentration in individual assets, technology types, weather systems, power markets and regulatory frameworks, to improve the stability of returns to our shareholders.”
Why is the stock struggling?
As mentioned, there has been weakness in the share price. It has fallen 30% since September 2022.
One issue has been rising interest rates, which have generally made dividend stocks less attractive. This is because investors can potentially earn higher returns from fixed-income investments like bonds.
Higher rates also make new clean energy projects costlier to finance, while another factor has been falling energy prices since September 2022.
All this has resulted in the fund trading at a 20% discount to net asset value (NAV). The risk here is that interest rates stay higher for longer, which could keep the shares down and the NAV discount wide.
Nice forecast dividends
Of course, the silver lining to this share price weakness is an attractive dividend yield.
For this financial year, the trust is targeting a payout of 7.47p per share. At a stock price of 101p, that translates into a forward yield of 7.4%.
This means investors could expect £37 in annual passive income from a £500 investment. Or £740 from £10,000. As always though, dividends can be cut.
Having said that, I’m encouraged that last year’s dividend was supported by healthy cash flow generation, with the payout covered 1.6 times.
I plan to buy more shares
In the years ahead, I reckon the clean energy theme is likely to become more important.
Admittedly, it might not seem like that now, with a lot of political and corporate backsliding on funding and targets. But global warming isn’t going away. It will only become a more pressing issue, in my view.
So I think there could be a rebound in the share price, especially if interest rates start falling this year.
Meanwhile, I intend to buy more of this FTSE 250 stock for my portfolio over the summer. I’ll take the passive income while I wait for a potential recovery in the share price.
