Stock picked: Greencoat UK Wind
Shares added: 3.43
Total shares owned: 8.427
Dividend yield: 4.90%
Payout ratio: 200%
This weeks stock
For this weeks stock, Greencoat Uk Wind ticker UKW won the vote by far! With 16 votes it out stripped the competition with only 9 voted for UNH. We have almost doubled our position in UKW this week which is great!
What does UKW do?
Greencoat UK Wind specialises in renewables infrastructure investments in energy, wind generation assets and on shore & off shore and farm projects. They invest into products with a capacity of over 10 megawatts, to put that into perspective, 1 megawatt can power 650 average homes. For offshore wind farms, the fund seeks to invest 40% of the total assets value at the acquisition and where a utility company retains an equity interests for a locked period of time. Greencoats company aim is to provide investors with an annual dividend that increases inline with RPI inflation while preserving capital value of its investment portfolio.
Dividend Yield: 4.90%
Payout ratio: 200%
Profit margin: 48.52%
Return on assets: 1.92%
Return on equity: 2.68%
P/E ratio (price to earnings): 45.22
Adjusted EPS: 3.14
EPS (Earning per share) Growth: -83%
Taking a look over the fundamentals of this stock quickly we can see it has been really beaten down this year. UKW has a great dividend yield of 4.9% but looking at the payout ratio of 200% we can see this is a huge red flag. Anything over 100% is a no go zone. Looking at the history,
This stock has previously been able to cover its dividend very well as of 2018 the dividend cover was 2.74! Please note that the payout ratio available was 2019 data. It is still worrying even concidering the past performance. This stock boasts a very health profit margin of 48% but as this is a closed end fund we would expect good profits.
Looking to the P/E ratio of 45 it seems UKW is very over priced and currently paying a premium for this stock. In 2018 UKW posted EPS growth of 144% but end of 2019 -83% EPS growth which isn’t great. We like to see a stock growing at a consistent rate, so such a high negative EPS growth is another flag.
With UKW being a closed end fund, it is traded on the secondary market, so seeing a Beta of 0.25 is not surprising at all due to there only being so many shares floated on the market. Another point of this closed end fund is to provide dividend income to its investors, which is why we can see here a massive difference between the cash held and the debt which the fund holds.
Overall after looking through this stock I see there are many red flags to me as an investor. It is great for its income but I believe there are much better long term holds for not only income but also growth.
In recent news from UKW they acquired Slieve Divena II from SSE Renewables for £51 million. Which has an capacity of approximately 18.8MW capacity.
This week we received didn’t receive any dividends into the account.
Total dividend (Month): £0.31
Total dividend (6 month): £0.31
Amount for charity (6 month): £0.08
General account summary
As of writing this blog we are currently only £0.54 in the red, very close to breaking even. Our portfolio now has a value of £378.20. Its really build up and I believe soon we will be seeing a balance of £400 very soon! It is surprising how fast the £5 can add up into a fair sized account. Recently I have been looking heavily into Financial independence and if this is achievable for the average person like you and myself. Later this week I shall be putting out a blog post about my findings.