Greencoat UK Wind Dividend Yield Hits 10.4% as NAV Discount Widens

The London Stock Exchange‘s FTSE 250 currently yields 3.5%, ahead of the FTSE 100’s 3.1%, yet the Greencoat UK Wind dividend story makes those index averages look pedestrian: the fund’s forward yield stands at 10.4% against a 2026 dividend target of 10.7p per share, driven largely by a share price that has fallen well below the value of its underlying assets.

UKW was the UK’s first renewable energy infrastructure fund. Its portfolio of 49 wind farms with a combined capacity of 1,942 MW generated 5,403 GWh in the most recent full year, contributing around 2% of the country’s electricity, according to the Greencoat UK Wind official website. The fund paid out £226.8m in dividends with respect to that year, with onshore wind representing 57% of portfolio value and offshore 43%.

Greencoat UK Wind Dividend: What Underpins the Yield

The high yield is a product of price weakness rather than an extraordinary uplift in distributions. The fund’s share price has detached from its net asset value (NAV) to a degree that is hard to ignore. As at 31 December 2025, the Greencoat UK Wind 2025 Annual Report shows net assets of £2,882,356 thousand, equivalent to 133.5 pence per share, down from 151.2p a year earlier. The single largest drag was power price movement, which reduced NAV by 10.9 pence per share across the year.

The discount has persisted. At 31 March 2026, NAV per share stood at 134.20p, according to data from AJ Bell. The same source shows the 12-month average premium/discount at -25.36%, slightly wider than the point-in-time 23.75% figure quoted on 16 July. Either way, the fund is trading at a material discount to its assets, and the spread between the share price and NAV is the primary reason the yield looks as it does.

The half-year results published on 30 July 2025 showed an unaudited NAV of 143.4 pence per share as at 30 June 2025, with aggregate group debt of £2.25 billion, according to the half-year RNS announcement on Investegate. Total dividends declared for the first half of 2025 were 5.18 pence per share. The trajectory from 143.4p in June 2025 to 133.5p at year-end reflects how quickly the power-price headwind moved through the portfolio.

The Risks Are Quantifiable, and the Fund Has Flagged Them

Two risks dominate. First, the government has announced the abolition of the Carbon Price Support from April 2028. Management estimates this could reduce Greencoat’s NAV by 3p to 5p per share, with electricity prices potentially falling by up to £5/MWh. Second, the NAV decline has pushed the fund close to its 40% gearing limit, which constrains its ability to borrow for further acquisitions. Neither risk is hidden; both are disclosed and quantified, which is worth noting when assessing whether the discount is rational.

Against those headwinds, the fund has taken steps to reduce cash-flow volatility. In April, it announced that 68% of cash flows were “fixed in nature” through until March 2027. Wind output is inherently variable, but over a full year generation is reasonably predictable, and the hedging arrangements reduce the exposure to spot power prices in the near term.

Shareholder conviction remains firm: 97.08% of voters rejected a wind-up resolution at the most recent annual general meeting. The fund has raised its annual dividend for 13 consecutive years, with increases linked to inflation. The 2026 target of 10.7p has not been guaranteed, but the track record is consistent.

There are 54 FTSE 250 members currently yielding 5% or more on a trailing 12-month basis. At 10.4% forward yield with a near-25% NAV discount, Greencoat sits at the extreme end of that cohort. The question for income investors is whether the power-price risk and gearing constraint are already captured in a share price that assigns a 25% haircut to audited asset values, or whether the discount is a fair reflection of structural uncertainty. The Carbon Price Support removal does not take effect until April 2028; the next real test of the thesis is whether power prices stabilise before the hedging book rolls off in March 2027.