Are shares in Greencoat Renewables a buy? Your options explained

Seasoned green investors will be familiar with the Greencoat brand, seeing as one of its funds — Greencoat UK Wind — is the biggest renewable investment company in London. But what about its smaller sister fund, the Greencoat Renewables trust?
The fund, which is dual-listed in Dublin and on London’s Aim junior stock market, invests in euro-denominated renewable infrastructure assets. While it is much smaller than Greencoat UK Wind, which has a market capitalisation of £2.8 billion compared with €964 million, it is still one of the biggest owners of European renewable assets, presiding over a €1.2 billion portfolio that has more than 1.5 gigawatts of generation capacity.
The trust, which like Greencoat UK Wind is managed by Schroders Greencoat, started out by focusing on the acquisition and management of operating wind farms in Ireland, and as such just over half of its operating portfolio is based there. Much of this part of the portfolio is contracted under regulated terms which guarantee an index-linked floor to the power price for 15 years.
But the trust has also branched out into other regulated markets across Europe in recent years: Germany now accounts for 23 per cent of its portfolio, with Sweden at 10 per cent, France at 8 per cent, and Spain and Finland at 3 per cent and 2 per cent respectively, as of the end of June.
Most of the fund’s assets are still invested in wind power, with 78 per cent of its capacity related to onshore wind, followed by 18 per cent at offshore wind, 3 per cent to solar and 1 per cent to battery storage. The portfolio is relatively young too, with 95 per cent of assets less than 10 years old. Borkum Riffgrund 1 and Butendiek, the German offshore windfarms, are its biggest assets at 12 per cent of the portfolio each.
Since its launch in 2017 the fund has delivered a total return of roughly 24 per cent, according to FactSet. But its share price has been shaky in recent years, partly because of rising interest rates and a wider sell off among renewable infrastructure funds. The shares now trade at around 22 per cent below their net asset value, similar to the Greencoat UK Wind fund at 20 per cent. On average renewable infrastructure funds trade 28 per cent below their NAV, according to the Association of Investment Companies.
But a key draw for Greencoat Renewables has been its chunky cash payouts. Its official policy is to increase its dividend annually up to Irish inflation, as measured by CPI. This is facilitated by the fact that 77 per cent of its revenues between 2024 and 2028 are contracted, with 69 per cent of those providing inflation protection. This gives Greencoat excellent visibility on how much cash it can expect to generate.
A high dividend yield of 7.4 per cent may trigger alarm bells, though it is in fact slightly below the average for the sector at 8.9 per cent, and so far payouts have been well supported. A net cash generation of €113.6 million for the first half of its year ended in June equated to a dividend cover multiple of three: in other words, Greencoat Renewables has enough cash on hand to pay out to its shareholders three times over.
In this light, the discount on the trust looks a decent buying opportunity for an income investor, though the gap between the shares and their net asset value is stubborn. Even after completing a €25 million share buyback, Greencoat Renewables, like its peers, has yet to win back market favour.
The fund does offer investors a meaningful way to diversify away from the main market, not to mention a very well-supported inflation linked dividend and a more diverse geographical portfolio than its sister fund. That being said, Greencoat UK Wind has a much better track record for returns, having delivered a total return of 58 per cent since Greencoat Renewables launched.
Advice HoldWhy Well-supported dividend but discount looks stubborn
The bootmaker Dr Martens listed in 2021 to much fanfare, but investors who have owned the shares since the beginning have suffered. The shares have lost more than 80 per cent of their value over the past three years, yet still trade on a price-to-earnings valuation that is steeper than the wider FTSE 250.
Last week, shares in the shoe seller jumped by as much as 13 per cent despite reporting a pre-tax loss of £28.7 million for the 26 weeks to September 29, down from a profit of £25.8 million compared with the same period last year.
This was largely in line with expectations, and an 18 per cent fall in revenue to £324.6 million was better than a forecast 20 per cent decline.
There have been five profit warnings in the past three years as the company has grappled with a slowdown in sales, a troubled expansion project in America and problems at its distribution centre in California. That is not to mention the imminent departure of its chief executive Kenny Wilson, who has led the company since 2018. Ije Nwokorie, the chief brand officer, is taking the top job in the new year.
The shares now trade at 24 times forward earnings, compared with 14.4 in the broader FTSE 250, which seems steep given its recent troubles. But some investors appear convinced that Dr Martens is now approaching the bottom of its earnings cycle, and the appearance of a new chief executive and chief financial officer could help revive sentiment toward the business.
The company did say last week that it had completed its £25 million cost reduction plan, mostly from job cuts. Inventory also reduced by £69 million year-on-year to £245 million, and net debt also fell by £130 million to £349 million.
These are steps in the right direction, but at this price investors deserve more evidence that the company can stage a major turnaround of its fortunes, especially as it enters the key Christmas season. Indeed, Wilson said last week that while the company had reported some encouraging signs of stronger demand, “the peak weeks are ahead”. They may make or break its valuation in the new year.
Advice HoldWhy Steep valuation given full turnaround still yet to play out