Investment trust insider on benefiting from yield while waiting for a re-rating – James Carthew: I’ve bought two more renewables, now looking at UK equity income
Disappointing inflation figures look likely to delay the start of interest rate cuts in the US. This is an unhelpful development for the many investment company sectors that have been hit since rates started to rise in 2022. I am not despairing, however. Patience is often a necessary virtue for investors.
It is definitely easier to be patient with a stock when you are receiving decent levels of dividend income from it. This past week, having droned on incessantly about the ridiculousness of discounts in the renewable energy sector, I decided to put more of my money where my mouth is and added two more names – Gore Street Energy Storage (GSF) and NextEnergy Solar (NESF) – to my existing exposure in Bluefield Solar (BSIF), Greencoat UK Wind (UKW) and SDCL Energy Efficiency Income (SEIT). The two new holdings came with dividend yields of about 11.5%, reflecting their sizeable discounts.
GSF, as I have explained previously, is much less exposed to the problematic UK energy storage market than other listed peers and should see plenty of upside as its new plants in Ireland, Texas and California come onstream over the course of the next year or two.
NESF is in the process of realising value from its portfolio to help fund a reduction in debt, share buybacks and perhaps new investments. The company is adamant that its capital recycling programme is progressing, but I have heard some investors express frustration about the pace of this. The negativity could mean that the share price responds well when disposals are finally announced.
You could make a similar case for investing in UK equity funds…. read more here