Downing Renewables and Infrastructure (DORE ) is drawing attention to its lowly 14% share price discount after hiking its dividend target by 7.6% and announcing the acquisition of two more hydropower plants in Sweden.

DORE shares are up 1.9% to 103.4p this morning on news the £187m investment trust is aiming to pay 5.38p per share through its quarterly dividends this year. 

Including assets it is in exclusive talks to buy soon, the company expects the payout will be 1.4 times covered by cash.

At yesterday’s closing price of 101.5p, the shares offered a 4.9% dividend yield.

According to Numis Securities data, the discount had widened by 3.7% to 14.4% in the past week against its estimated net asset value (NAV) per share of 118.55p. 

Winterflood gives a 12.8% discount against the last published 30 September 2022 NAV per share of 116.5p. 

That puts it on a ‘cheap’ Z-score of -2.4 against a one-year average discount of 1.6%, a de-rating that has been demonstrated across the renewables sector in response to the spike in interest rate expectations in the fourth quarter of last year.

DORE is soon to publish its second set of annual results, which will update the valuation to 31 December.

It has also announced the £5.1m cash acquisition of two run-of-river hydropower plants in Sweden generating around 2.5GWh and 6GWh of power a year. It says both underwent major renovations, in 2011 and 2015 respectively.

The transactions lift DORE’s already sizeable Swedish hydropower portfolio to 28 assets, accounting for more than half the listed fund.

Liberum analyst Shonil Chande maintained his ‘buy’ rating with a 115p price target, saying: ‘In aggregate, the acquisitions represent about 2% of NAV and so are not material but do provide further exposure to both the benefits and drawbacks of hydropower – namely the exceptionally long asset lives, around 100 years, but also the volatility in output from run-of-river systems.’