Greencoat UK Wind (UKW ), the biggest of the London-listed renewables funds, has launched a £100m share buyback programme and hiked its dividend as it looks to narrow the 20% discount on its stock price.

The 6%-yielder, which has total assets including debt of nearly £5bn, says its portfolio is generating net returns of 10% that are not reflected in the share price.

The shares jumped 3.4%, or 4.4p, to 134.7p in early trading.

In light of its financial strength, which has seen it recently buy a stake in the London Array offshore wind farm, and strong cash flows, the fund said it had allocated £100m for brokers RBC and Jefferies to buy back its depressed shares.

The board has also declared a fourth quarter dividend of 3.43p, which will lift the total payout for this year to 10p, above the 8.76p target. It will then target 10p for 2024, a 14.2% increase over the original 2023 target which it says is significantly ahead of forecast RPI inflation for December.

UK Wind is the only renewables fund to have increased its dividend in line with the retail prices index every year since launch 10 years ago.

The board expects to continue this policy and says dividend cover, which has averaged two times since flotation, will remain ‘strong’ over the long term and ‘robust’ even in the ‘face of a range of extreme downside power price sensitivities’.  

Chair Lucinda Riches said: ‘Since listing in 2013, UKW has established a strong track record of delivering significant shareholder value, having paid £887m of dividends to date and reinvested £877m of excess cash generation.’