Nextenergy Solar hikes annual dividend despite slip in NAV

Solar energy and energy storage investment firm NextEnergy Solar Fund hiked its dividend by 11% despite reporting flat income and a modest drop in net asset value (NAV) in the year ended 31 March.

Total dividends paid for the year were 8.35p, up from 7.52p the year before, the company announced on Wednesday, just one day after the unveiling of a £20m share buyback programme.

The dividend was covered 1.3 times by earnings, slightly down from 1.4x the year before, while the group is targeting dividend cover of 1.1-1.3x for the current financial year.

NAV per share declined to 104.7p for the period, down from 114.3p the year before, which was partly due to a drop in short-term UK power price forecasts as gas prices have fallen.

Nevertheless, NextEnergy said it increased the number of its operating assets to 103 from 99, reaching the 1GW milestone for installed capacity, with 1,015MW by 31 March, up from 889MW 12 months earlier.

Income generated was £80m, more or less unchanged from £79m previously.

"The continued macroeconomic backdrop has presented challenges to the sector, but I am encouraged that the company has continued to show resilience having achieved multiple key milestones throughout this financial year," said chair Helen Mahy.

"The company has maintained strict discipline across its capital structure and continues to look at active ways to narrow the discount in the share price compared to the company's NAV, including implementing a £20m share buyback programme."

The stock was up 1.6% at 77.82p by 0849 BST, extending gains after a 4% gain on Tuesday following the buyback announcement.