The UK market currently has an abundance of high-yield dividend stocks that could provide me with reliable passive income over the next few years.
One FTSE 250 stock that I’ve been adding to in my portfolio recently is The Renewables Infrastructure Group (LSE: TRIG). Here’s why.
A market-beating yield
For starters, the share price has struggled lately, boosting the dividend yield to an attractive 6.8%. The forecast yield is 7.2% for 2024, which is far higher than the market average. And it’s a higher rate of potential income than I’d get from just sitting in cash.
More specifically, I like the long-term potential of the renewable energy sector that the company operates in. The world’s capacity to generate electricity from green technologies is on course to grow rapidly over the next two decades.
Renewables Infrastructure owns a broad portfolio of wind, solar, and battery storage assets across the UK and five European countries. These are capable of powering the equivalent of 1.9m homes.
This diversification is important due to shifting weather patterns. If there’s little wind blowing in the UK, for instance, the rest of the portfolio can take up the slack.
Also, some of its contracts are fixed price, which means that about 63% of expected revenues will not vary with electricity prices over the next decade. And there is low exposure to changes in interest rates.
Passive income generation
The firm is targeting a total dividend of 7.18p per share for 2023. Next year, that is forecast to rise to 7.37p per share.
So, at today’s share price of £1.02, that means I’d need approximately 13,700 shares to target £1,000 in passive income in 2024. Those shares would cost me around £13,975.
Now, that isn’t the sort of money I’m going to find down the back of my sofa while I’m hoovering. And I’d never want to put too much money in a single stock, especially as dividends can always be axed.
But to my eye, Renewables Infrastructure offers an attractive and seemingly secure income long into the future. Therefore, I’m committed to adding even more shares to my diversified income portfolio when I can.
A potential tsunami of green policies
Labour leader Sir Keir Starmer, who is currently the overwhelming favourite to become the next prime minister, has promised to turbocharge green infrastructure investment.
Indeed, he has promised to “throw everything” at achieving net zero. Some plans include:
- The creation of Great British Energy, a publicly owned clean energy company to harness sun, wind, and wave energy
- Looser restrictions for onshore wind farms in England, reducing the planning process “from years to months” for new turbines
- Doubled output from onshore wind by 2030
- Offer to clean energy companies of up to £500m a year to set up manufacturing in the UK
Of course, nobody knows whether any of these plans will be realised. Or whether Labour will win the next general election outright. Future regulation could always end up working against the company, especially as it operates across multiple countries.
Also, reaching net zero will need more than solar and wind farms.
Nevertheless, if these proposed policies come to pass, it would be positive for Renewables Infrastructure. And it could cause investors to reassess the whole sector, potentially boosting its share price well above £1.
