Greencoat UK Wind (UKW)

27/02/2026

Results analysis from Kepler Trust Intelligence

Whilst acknowledging the challenging backdrop in terms of sentiment, as well as the disappointing year in terms of returns, this was a confident set of results from Greencoat UK Wind (UKW), in our view.  Over 2025, UKW's NAV decreased by 17.8p per share to 133.5p, a decrease of 11.8%. The most significant impact was lower power price forecasts, driven principally by falling gas prices over the year. The shareholder total return for the year, based on the share price and when factoring in dividends, was -4.9%, given the discount widening.

Declared dividends for the year totalled 10.35p per share, representing dividend cover of 1.3x. Since listing, dividends have risen by RPI or more for 12 consecutive years meaning UKW is one a few FTSE 250 companies to have achieved this. In addition, c. £1bn of excess cashflow has been reinvested in the portfolio.

In contrast to market sentiment, which has seen UKW's discount creep wider (currently c. 30%), the fundamentals for electricity demand across the UK appear brighter than ever. The management team highlighted that electrification of transport (EVs) and heat, not to mention demand from data centres, mean significantly greater electrons are needed in the UK over a relatively short period of time. Wind assets are a relatively quick and cost-effective way of providing this supply (for example compare the cost of onshore wind from the recent CfD auction of £72/MWh to the UK Government's latest estimate of gas at £147/MWh).

Since IPO, UKW's strong return profile and capital structure have delivered aggregate dividend cover of 1.7x. The last couple of years have seen dividend cover fall to 1.3x, but the team predict a recovery over the next five years to 1.8x. UKW's unambiguous dividend policy, of paying a dividend which rises in-line with CPI inflation is a key attribute, in our view. In addition, UKW's structurally higher dividend cover means that it offers significant resilience to downside scenarios with regards power prices, and still has options to deploy surplus cashflows towards new investments, buybacks or reducing debt. We note that UKW intends to continue to buy shares back, illustrating the confidence the board has in strength of the balance sheet. UKW has delivered impressive NAV total returns of 178% since launch 12 years ago, yet shares currently trade below their IPO price. Yet as the manager highlights, the case for the UK harnessing wind energy to meet surging demand has arguably got stronger. Any narrowing of the wide 30% discount would add to the strong potential returns from the underlying assets.

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