The board of NextEnergy Solar Fund (NESF) has approved a dividend target of 8.35p, representing an 11% increase from the previous year’s dividend of 7.52p. This will represent NESF’s 10th consecutive dividend increase, with NESF paying a total of £305.8m in dividends since its IPO, or 55.72p per share, fulfilling its progressive dividend objective. NESF has covered its dividend in all 9 years since its IPO, and is forecasting a 1.3x to 1.5x dividend cover for the forthcoming payment.
Kevin Lyon, NESF’s chairman, commented:
“This announcement reflects the strong position of the Company, its secured revenue flows, robust operational asset base and attractive growth prospects. It also demonstrates the resilience of NextEnergy Solar Fund, which continues to offer investors an attractive dividend yield through access to a high-quality portfolio of solar and battery storage assets.”
Alongside the announcement of its dividend increase came its quarterly NAV update. The major takeaway of this update was the reveal of an omission of VAT payable accounts in the calculation of its NAV due to an error in its internal accounting software, effectively overstating NESF’s NAV. This was equivalent to a £15.9m overstatement to its 31 December 2022 NAV, with its NAV being marked down from £713.0m to £697.1m, equivalent to a loss of 2.7p per share. This had no practical impact to its cashflow generation and dividend cover though. We note that there is no change to the 31 March 2023 NAV.