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LONDON - NextEnergy Solar Fund (NESF), a prominent player in the renewable energy sector, is currently showcasing the second-highest dividend yield within the FTSE 350, despite experiencing a significant share price depreciation over the past two years. The company attributes the decline primarily to broad macroeconomic challenges, particularly the influence of rising interest rates on income-generating assets like those in the renewable energy market.
The fund, which focuses on solar energy investments, has reported a robust dividend coverage of 1.3 times the cash flow for the fiscal year ending March 31, 2024. It aims to maintain a dividend coverage target between 1.1 and 1.3 times for the subsequent fiscal year, ending March 31, 2025, with an increased dividend target.
As part of its strategic initiatives, NESF is actively engaged in a capital recycling program, which involves divesting from certain assets and reallocating capital to opportunities with higher expected returns. The proceeds from these transactions are being utilized to reduce the fund's debt levels and to facilitate share repurchases. These buybacks are deemed to be particularly value-enhancing due to the current discount to net asset value (NAV) that the shares are trading at. The final phase of this program, involving 100 megawatts of assets, is anticipated to have a substantial impact on the fund's operations.
The information presented in this article is based on a press release statement from NextEnergy Solar Fund, which was disseminated to provide updates on the company's financial health and strategic maneuvers. The original press release was distributed by Reach, a non-regulatory press release service of RNS, part of the London Stock Exchange (LON:LSEG).
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