Latest news with #NESF
Yahoo
12-07-2025
- Business
- Yahoo
An 11.5% yield?! Here's the dividend forecast for a hot income stock
Renewable energy income stocks currently offer impressive dividend yields. That's because Investor sentiment in this space remains subdued due to higher interest rates and falling energy prices. And as a consequence, many of these shares are trading at discounted valuations. 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? 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. 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. 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. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
Yahoo
17-06-2025
- Business
- Yahoo
NextEnergy Solar Fund Ltd (LSE:NESF) Full Year 2025 Earnings Call Highlights: Navigating ...
Gross Asset Value: Above GBP1 billion. Net Asset Value (NAV): GBP547.4 million, with a NAV per ordinary share of 0.951p. Cash Income: GBP73.2 million generated during the year. Dividend Target: 8.43p per share for FY25-26, with a yield of approximately 12%. Debt Gearing: 29.7% excluding preference shares; 48.4% including preference shares. Dividend Payments: GBP49.2 million paid in dividends. Share Buyback Program: GBP11.2 million spent, purchasing over 15 million shares. Debt Reduction: GBP59.5 million reduced, including GBP46.8 million in short-term revolving credit facilities. Energy Generation: 830 gigawatt-hours generated, 5.3% below budget. Operating Assets: 101 assets totaling 937 megawatts of installed capacity. Capital Recycling Programme: GBP72.5 million raised from asset sales, with a NAV uplift of 2.76p per share. Warning! GuruFocus has detected 2 Warning Sign with LSE:NESF. High Yield Dividend Stocks in Gurus' Portfolio This Powerful Chart Made Peter Lynch 29% A Year For 13 Years How to calculate the intrinsic value of a stock? Release Date: June 16, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. NextEnergy Solar Fund Ltd (LSE:NESF) has delivered 11 consecutive years of fully cash-covered dividends, demonstrating strong income generation and disciplined capital management. The company maintains a high dividend yield of approximately 12%, one of the highest in the FTSE 350, supported by a robust revenue base. NESF's portfolio includes 101 operating solar and battery storage assets, contributing to diversification and long-term growth potential. The company has successfully expanded internationally and into the energy storage sector, enhancing revenue streams and future-proofing the portfolio. NESF has a strong governance framework with an experienced and independent Board, ensuring transparency and accountability in operations. NESF's shares have been trading at a significant discount to net asset value, averaging around 27%, reflecting broader market trends and investor sentiment. The company's net asset value decreased due to declining power price forecasts and lower-than-expected generation, impacting valuations. The Capital Recycling Programme has been slower than anticipated due to a challenging M&A environment, affecting capital recycling speed. There are concerns about unplanned grid outages and their impact on generation performance, which could affect future revenue stability. The macroeconomic environment, including rising interest rates and regulatory changes, poses challenges to maintaining investor interest and share price stability. Q: Can you explain the strong irradiation performance despite last year's weak solar irradiation data? Also, what caused the 5.3% below-budget performance in asset generation, and have there been improvements in FY26? A: Irradiation budgets are set at the project's outset and updated annually. March was particularly strong, recovering much of the year's gap. The below-budget performance was due to network outages and weather-related challenges affecting asset components. Despite this, the portfolio delivered a 1.1 times cash-covered dividend. Improvements are ongoing for FY26. Q: With unplanned grid outages, do you expect more grid spending to reduce these? Also, how might thermal pricing impact your PPA portfolio? A: Increased grid spending is expected to improve stability over time, though it's a long-term process. We account for some yield curtailment in forecasts. Regarding thermal pricing, we anticipate a neutral to positive impact due to our portfolio's distributed nature. We await government updates on REMA for further clarity. Q: What were the key drivers behind the GBP3.1 million revaluation decrease in NextPower III? A: The revaluation was due to updates in the power sales strategy of one of the assets within NextPower III, which impacted its valuation. Q: Can you comment on the recent Foresight rumors and whether strategic options will be considered before appointing a full-time Chair? A: We can't comment on market rumors, but the Board is exploring all avenues to increase shareholder value, including corporate transactions and restructurings. We are working with external advisors to model future scenarios independently. Q: Why has the share buyback program paused, and is the investment management fee being reduced? A: The buyback program paused due to recent share price strengthening and capital allocation considerations. We are in active discussions with the Board regarding the fee structure to align with investor outcomes. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
