Green Money: Greencoat UK Wind: Share offer – May 2019

When you think about where to invest your money, you should consider carefully where you money is going and what it is doing. One company that I invest in is Greencoat UK Wind (UKW) the £1.6+ billion investment trust which holds a range of wind assets in the UK and abroad. If you share my concerns about the climate emergency then you should consider Greencoat as an investment.

Green investing is nothing new but it’s sometimes hard to know what to invest your money into.

I’m not so keen on electric cars but I think that holding renewable energy investments is a good way to make your money work sustainably. We have invested directly into start-up renewable energy projects of different shapes and sizes from cooperative projects to VCTs and I like investing in Abundance Investment, which is a bit of a hobby of mine.

The concentration of CO2 in the atmosphere is increasing at an exponential rate and the power industry makes up 38% of CO2 emissions. Here in the UK we have fantastic wind resources and the technology is now well developed that it’s a cost effective power source when compared with the alternatives and has a lower carbon footprint. It’s matches my (and others) green investment criteria. If you really care about the climate emergency then you should put your money where your mouth is. It’ll take more than just paper straws and reusable cups to fix our ecology destroying economy.

UKW graphs

The attraction of Greencoat UK Wind for us is that it’s very much a buy and hold investment. We don’t expect to double our money but the risks are well known and clearly laid out. You are investing in operating wind farms – so the development risk is not there, they are already spinning and making money. The future revenues are pretty secure with guaranteed prices for energy generated and the large number of wind farms (34) and individual turbines (hundreds) means that you’ve got diversification to protect you. Most (32) of the windfarms are onshore and the installed capacity of the Portfolio of 950MW – or half a million kettles (when the wind blows).

This Investment Trust is worth over £1,600 million making it the largest of the green energy investment trusts and a FTSE250 member. The new shares are on sale for 133p each and they pay a dividend of 6.94p per annum (2019) or 1.735p per quarter. This is at a 5% discount to recent trading prices. You are buying in at a dividend yield of 5.2% and the dividend rises with RPI annually. The company has consistently had a solid dividend cover meaning that the dividend is secure, although due to expansion the company does have some gearing which this share offer goes towards reducing/investing for the future.

As part of our Ready, Aim, Fire program, placing money in UKW gives us a solid and growing dividend base in a liquid investment and matches our ethics. What’s not to like. We’ve held shares for about 4 years now and the IRR return is about 10.5% after tax. The performance has been good to date and I don’t expect much to change.

UKW performance
Greencoat UK Wind total return 2013 to 2019
UKW map.PNG
Map of Greencoat UK Wind’s windfarms

How to Invest

You can buy UKW shares on the stock market (LON:UKW) currently at a price of around 137p but you’ll be paying 0.5% stamp duty. This offer is at a price of 133p and no stamp duty is payable, the minimum investment is £1,000.

A copy of the offer can be found here. You can apply direct with the application form at the end of the prospectus, the cost to you will be one envelope + stamp (no duty). Alternatively you could go through an intermediary like Hargreaves Lansdown who will charge you 1% commission with a min of £20 and max of £50. They’d hold the shares for you and you’d not have to worry about the paper cert. They are not advertising it on their site but speaking with them, they said that they are able to buy for you if you like

I’m tempted to go direct and save a bit of money. It’s a bit of a faff but we have other shares in UKW and I was considering transferring them to HL Vantage account at some point in the future – one extra certificate doesn’t make much of a difference.

Conclusion

As part of our Ready, Aim, Fire program, placing money in UKW gives us a solid and growing dividend base in a liquid investment and matches our ethics. What’s not to like. We have a bit of spare money these days after the tax man rebated us and I sold some VCTs, so some money will be going into this.

Finally this is not advice, make your own financial decisions and do your own research.

DIYInvestorUK  has some good write-ups about other investments (start here and here) that are out there and there is a board on LemonFool that’s worth a read.

Good luck, GFF

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6 thoughts on “Green Money: Greencoat UK Wind: Share offer – May 2019

  1. This is on my watch list – don’t have £1k spare to buy at the low price and that premium is a little too high for my liking; I don’t think I’ve ever bought any investment trusts at >5% premium (tend to buy at discount), so it’s making me think twice.

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