I’ve been following Greencoat UK Wind (LSE: UKW) for some time now, as it’s one of the most promising renewable energy stocks on the FTSE 250.
The big attraction is the yield, which has recently ticked just above 10% — a goldmine for income investors.
But as always, the question is whether that income stream is dependable. I decided it was time to take a closer look.
What the business does
Greencoat UK Wind invests only in operating UK wind assets, including both onshore and offshore farms. That matters because it avoids the build-out risk you get with early-stage renewable projects, where delays and overruns can hurt returns.
The trust’s stated aim is to pay an annual dividend that rises in line with inflation while preserving capital value in real terms.
Here’s a few quick stats:
| Metric | Latest figures |
|---|---|
| Operating wind farms | 49 |
| Net generating capacity | 2GW |
| 2025 renewable power generated | 5,403GWh |
| 2026 dividend target | 10.70p per share |
Aside from a brief pause in 2024, the company’s increased its dividend for 12 consecutive years, paying out £1.4bn in dividends since its IPO. That’s the kind of credibility income investors need: a dividend backed by a long record, not just a sudden yield jump.
So far, so good. But is that the whole story?
What I like about the stock
The income case is straightforward. Greencoat UK Wind targets an inflation-linked dividend, with its 2025 annual results presentation stating a target of 10.70p per share for 2026. That would be a 3.4% increase, in line with December 2025 CPI.
In its H1 2025 presentation, it showed earnings covered dividends 1.3 times. That isn’t bad, but if earnings slip further this year, it could struggle to maintain that level.
This is the key thing investors need to watch. A 10% yield sounds brilliant, but if the trust can’t cover it, the dividend’s at risk. There’s some comfort in the fact that strong cash generation and reinvestment have kept things covered in the past.
Basically, for a stock boasting a 10% yield, the coverage is above average — but it isn’t rock solid.
Other risks to watch
The elephant in the room here is the share price. It’s down 22% in the past five years. Estimates suggest it’s now trading at a discount to NAV of between 23%-29%. The 2025 results presentation showed NAV per share fell to 133.5p after the updated review.
That tells me sentiment’s been poor, even if the underlying assets remain productive.
The risks are real. Wind generation’s variable, power prices can fall, debt costs matter, and policy shifts can hit the sector. The company itself noted below-budget generation in 2024 and 2025, plus pressure from power-price assumptions.
Long story short?
While I think UK Wind’s a solid business – and one that I’d love to see succeed – it’s operating in a very challenging industry. As a result, that 10% yield’s balancing on a less-than-stable foundation.
For investors willing to stomach the volatility, it’s worth considering but only as a small allocation. Personally, I’ll hold off until the sector stabilises.
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Mark Hartley does not hold any positions in the companies mentioned.
