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I think we’d all agree that an extra £109 coming our way each quarter would make life a bit easier. Whether it’s for beer money, groceries, or something completely different, the freedom to have a passive income stream can make it possible.
One way to build this is via buying income shares from the stock market. And here’s one to consider.
Utilities for the future
I’m talking about the Renewables Infrastructure Group (LSE:TRIG). The investment trust owns a portfolio of renewable energy infrastructure assets, as the name suggests.
The company earns cash primarily from revenue generated by its renewable assets. This means electricity sales, whether directly to the market or through fixed-price contracts with third parties. Further, there’s also the aim of long-term capital appreciation of the actual assets.
Over the past year, the share price is down 17%. Part of this is directly attributable to the portfolio’s lower net asset value (NAV). After all, the share price should closely follow the NAV. Some reasons for the fall include weaker power price forecasts, some grid outages, and interest rates staying higher for longer (making new debt more expensive than previously thought).
However, I still think the company’s long-term fundamentals are strong. Even though investor sentiment (and government policy) on renewables has been uncertain recently, I can’t see this lasting for long. Renewables are the future of energy, and to me that’s an unavoidable fact.
Strong track record
The cash flows made from the assets are then partly used to fund the dividend. At the moment, it has a juicy 10.88% dividend yield. It typically pays out income each quarter, making it more appealing than some other shares that only pay out annually.
Of course, dividends aren’t guaranteed. But the company has a solid track record not only of paying dividends but also of increasing them over the past few years. The H1 2025 interim report showed a net divdiend cover ratio of 1.0. This means the dividend’s completely covered by the latest earnings per share, meaning it doesn’t have to eat into retained earnings to pay. This is a good sign for sustainability.
Looking at the numbers, a £4k investment could yield £435.20 in annual dividends, or £108.80 a quarter. This assumes the current dividend will be paid out again. In reality, it could be higher or lower, but those are the numbers as we currently stand.
A long-term play
The main risk I see is if general sentiment towards renewable energy stays lower for longer than I anticipate. In this case, the stock could keep falling, eroding the dividend gains. Volatility from underlying commodity pricing is another potential concern.
However, using a long-term time horizon, I still think it’s a stock for investors to consider.
