Image source: Getty Images
One FTSE 250 dividend stocks I like the look of paying me now and in the future Greencoat UK Wind (LSE: UKW).
Here's why I pick up some stocks when I have the cash.
Winds of change coming in?
Greencoat has become one of the biggest wind power generators with its many wind farms. Also, it already has good relationships with some of the biggest energy suppliers.
Let me be clear, oil is still the fuel of choice. However, there has been a rise in anti-fossil fuel sentiment in recent years. This has allowed firms like Greencoat to tap into green sentiment as the world looks to produce clean energy. In fact, many developed governments around the world are actively looking to move away from fossil fuels in the future.
In terms of share price, Greencoat hasn't had the best of times over the past 12 months. Stocks have fluctuated up and down. They are down 2% this time from 145p this time last year, to current levels of 142p.
This is of little concern to me, as the recent economic downturn has affected the real estate sector. Higher interest rates have detrimental ratios and net asset values (NAVs).
My investment case
From a bullish perspective, Greencoat shares look extremely attractive to me from an income perspective. Business is aimed at growth and rewarding shareholders. Currently, the annual yield is 7.4%. FTSE 100 an average of 3.6%. In theory, £1,000 invested today would net me £74 in dividends. However, it is worth remembering that benefits are not guaranteed.
Furthermore, the company has a good payment history. I understand that past performance is no guarantee of the future. However, it's hard to ignore Greencoat's record payout going back to 2013. And, as the race to move to cleaner alternatives heats up, Greencoat is in a prime position to cash in.
Finally, the new Labor government has given the green light to the construction of an offshore wind farm. This would give Greencoat the opportunity to expand where you are, increase output, and increase income and returns.
On the other side of the coin, it is worth remembering that wind farms are very expensive to set up and maintain. These costs can see the firm's balance sheet and dividend payment propensity affected.
Another concern is the state of the local market and economic volatility. Firms like Greencoat often use debt to finance growth. Since debt is more expensive when interest rates are high, earnings and returns may come under pressure.
Final thoughts
Despite the believable risks, I think the advantages outweigh the disadvantages to some extent. Along with the rate of return, I am particularly encouraged by Greencoat's position in the wind energy movement. In addition, as sentiment and efforts to move away from traditional fossil fuels grow, Greencoat has a great opportunity to improve earnings and growth.
Source link
