I am searching for the best dividend stocks that I believe can help me build wealth over the years. Two picks that I am interested in buying are UK Greencoat Wind (LSE: UKW) and NextEnergy Solar Income Fund (LSE: NESF).
Both of these stocks are focused on the green revolution, which is becoming increasingly important as the world moves away from traditional fossil fuels. Governments are setting ambitious decarbonization goals, and these companies are positioned to benefit from this trend.
One key similarity between the two stocks is that they are both real estate investment trusts (REITs). This means they are exempt from corporation tax and must distribute 90% of their profits to shareholders. This makes them attractive to income investors.
Greencoat invests in offshore and onshore wind farms and has the largest portfolio in the UK. It generates revenue by selling the energy it produces to other energy companies. The stock currently offers a dividend yield of 7.5% and has a track record of increasing dividends for nine consecutive years.
NextEnergy focuses on solar energy assets and also stands to benefit from the growing demand for electricity. The stock has a forward dividend yield of close to 9% and a favorable price-to-earnings ratio of 9.
However, there are some concerns about both stocks. Greencoat is highly dependent on energy prices, which can be volatile. Additionally, the cost and regulatory hurdles associated with building wind farms could impact the company’s growth potential. Similarly, building solar farms is a costly and complex process that could affect NextEnergy’s returns.
In conclusion, both UK Greencoat Wind and NextEnergy Solar Income Fund are promising dividend stocks that could be worth holding for the long term. It’s important to consider the risks and uncertainties associated with investing in renewable energy companies.