Greencoat UK Wind (UKW) Shares Edged Higher on Dividend Hike

The Greencoat UK Wind PLC (LON: UKW) share price edged higher after it announced a series of strategic moves to enhance shareholder value. These measures include increasing its annual dividend target to 10p and launching a share buyback program worth up to £100 million. 

Since the company's admission to the London Stock Exchange in March 2013, it has demonstrated impressive financial performance. During this period, Greencoat UK Wind has generated £1,764 million in cash flow, paid out £887 million in dividends, and reinvested £877 million of excess cash to bolster its portfolio of UK wind power assets. 

The company has consistently raised its dividend in line with Retail Price Index (RPI) growth and reinvested profits to ensure that its Net Asset Value (NAV) continues outperforming RPI. As a result, UKW has been delivering net returns to investors at a rate of 10%, assuming shares are purchased at NAV.

Furthermore, the company believes it is well-capitalized and is poised to leverage its market-leading position, exemplified by its recent investment in the London Array offshore wind farm. In line with its capital allocation policy, which is regularly reviewed by the board, Greencoat UK Wind is committed to optimising shareholder returns. 

Given its continued operational strength, which the board and management feel is not adequately reflected in the current share price, the company is initiating a share buyback program with a potential value of up to £100 million while increasing the annual dividend target to 10p.

This dividend increase, including the 10p target for the 2024 financial year, represents a substantial 14.2% growth over the 2023 target of 8.76p. The decision to pay a dividend of 3.43p per share for Q4 2023 also contributes to an increased 2023 full-year dividend target of 10p.

Greencoat UK Wind has a strong record of dividend cover, with an aggregate cover of 2.0x since its listing, and it anticipates maintaining robust cover levels in the face of potential power price sensitivities. 

The share buyback program is seen as a favourable use of company funds to create shareholder value. The program will begin shortly and, depending on market conditions, conclude by October 25, 2024.

Greancoat UK Wind (UKW) share price. 

The Greencoat UK Wind (UKW) share price edged higher despite raising its dividend payout and buyback programme.