When we see a dividend stock with a forecast yield as high as 10.3%, it can be wise to be suspicious. It often means something has gone wrong with the company, and investors don’t trust the dividend. Dividend cuts and share price falls are often the outcome.

In this case, I’m talking about Greencoat UK Wind (LSE: UKW), and an interesting thing has been happening. Its share price has risen 10% since a 2026 low point in February.

It’s still down more than 20% over the past five years, but it does seem investors are taking a renewed interest in it. Let’s dig a bit deeper.

How does the dividend look?

Delivered a 12th consecutive year of dividend increases with or ahead of inflation

— Lucinda Riches C.B.E.

That quote is from the board chair, at full-year results time in February. It can’t be coincidence that that’s when the share price gains started.

The update also told us the “dividend policy will now be to aim to provide shareholders with an annual dividend that increases in line with CPI inflation“. That means a target of 10.7p per share in 2026, with the company aiming for long-term cover of two times by earnings.

The company made share buybacks of £109m too, and reduced its debt principal by £168m. Does this sound like a dividend stock that’s short of cash? No, I don’t think so, either. The feared cuts might be nothing to worry about after all.

Renewable energy struggles

It’s not all sweetness and light at Greencoat, however. And the main problem seems to be falling asset values, as the desire for renewable energy has waned under a political redirection towards oil.

At FY 2025 results time, Riches also spoke of “significant divestments” during the year. She added that capital plans for 2026 include “further divestments, reducing gearing, continuing share buybacks and a disciplined return to reinvestment“.

The following table shows how dividends have been rising over the past five years, but year-end net asset value per share (NAV) has been falling since 2022.

The company, structured as a real estate investment trust (REIT), has strict debt management policies. That includes a limit on aggregate debt of no more than 40% of gross asset value at the time of drawing. The figure stood at 42% at 31 December — still within covenants, but clearly making investors a bit twitchy.

What should investors look for?

It seems a shame to me that Greencoat, while generating strong cash flow and paying increasing dividends, needs to dispose of some of the very assets its cash depends on.

Still, I expect we’ll see better focus in the future, retaining higher-valued assets. And I have little doubt that renewable energy will return to favour — hopefully before too much longer.

Despite the market’s apparent misgivings, I rate Greencoat UK Wind as a long-term dividend stock definitely worth considering.