Is UKW a buy?

Weeks summary

Stock picked: Greencoat UK Wind

Ticker: UKW

Dividend yield: 5.13%

Payout ratio: 45%


Dividends received £0.28

Charitable donation:£1.22


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This weeks stock

What does UKW do?

Greencoat UK wind (UKW) is a closed end fund with a substantial majority of their portfolio in operating UK wind farm projects. The fund invests into both onshore and offshore wind farms. UKW currently has investments in 36 wind farms across England, Scotland, Wales and Northern Ireland. The company’s aim is to provide investors with a dividend which increases in line with RPI inflation while preserving the portfolios capital value. UKW invests in operating UK wind farms, with exposure to offshore limited to 40% of Gross Asset Value. Currently UKW has a installed capacity of 998MW.

Fundimentals:

Dividend Yield: 5.13%

Payout ratio: 45%

Operating margin: 48.52%

Return on equity: 2.35%

P/E ratio (price to earnings): 43.12

Adjusted EPS: 3.14

NAV: 120.06

Premium/Discount: 13.45%


Stock breakdown:

Todays stock we are looking at UKW, this closed end fund has primarily been created to provide an income linked with the RPI inflation to keep income value. You can tell this due to a very juicy yield of 5.13%, the payout ratio is quite controversial as finding data on this. Using marketbeat.com we drive at a payout ratio of 36.74% (based on cash flow) but using advfn we have a payout ratio of 0.45.


Looking at the operating margin we have a very nice 48.52% to me this looks very good but have to remember this doesn’t operate link a normal company as this is a closed end fund.


The P/E ratio of UKW is very high at 43.12 which shows its over valued. This isn’t how we see if the stock is trading at a premium completely. We also have to take a look at the NAV (Net Asset Value). We can see for UKW the NAV is 120.05p (£1.2005). With the current share price of 135.2p (£1.352) the stock is trading at a premium of 13.45%. Combining these two we can defiantly see we are paying a decent premium for UKW shares.

This year UKW issued a £400m share issue which took the market cap to £2.4bn, shooting past rival close end fund TRIG. The managers used the capital to buy a 25% stake in a Cumbrian offshore wind farm and to clear all short term debts. [1]


Earlier in the year UKW invested £320m into a Scottish did farm of 50 turbines, though analysts cautioned this as the four earlier transactions UKW made were a result of £512m of unfunded commitment, exceeding its overdraft facility of £300m. [2]


The dividend payment months are February, May, August and November.


The Premium/Discount over the last 5 years has been between 10-15% but there has been points where the premium has dipped bellow this. This just shows that UKW normally trades at a premium.

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Dividends received


This week we received 3 dividend this week totalling £0.28

Total dividend (6 month): £4.91


Amount for charity (6 month): £1.22


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General account summary

Next week there won’t be a stock analysis blog due to moving house and restrictive internet.

I have some great news that I officially support an amazing charity called Action Tutoring. I shall be creating a blog to go more in-depth about the charity but if you want to check them out click here.


This page was created to help others in finances but I realise that while helping us to become better investors and improve our wealth that there should be more done to help children from disadvantaged backgrounds. This is where the charity comes into the page as they offer tutoring for children from disadvantaged background in the UK, I hope this page would create a full circle and help create a bit of a better world.

What to know how investing into Index trackers and adjusting your habits could help you build wealth? Click here


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What is:

P/E ratio EPS Payout ratio BETA Dividend


Here is a list of great books to read - click here


[1] £400m share issue

https://citywire.co.uk/investment-trust-insider/news/uk-wind-roars-past-trig-on-bumper-400m-fund-raise/a1406618


[2] Scottish wind farm of 50 turbines

https://citywire.co.uk/investment-trust-insider/news/uk-wind-s-high-share-rating-looks-vulnerable-after-320m-buy/a1350793



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