Whenever I see a double-digit dividend yield, my eyebrows rise. This is because it’s so far above the index average, or even the UK base interest rate. As a result, it’s likely going to be a high-risk investment, but the potential income could make it worthwhile. Here’s a stock with a dividend forecast in excess of 13% I’ve spotted.

Key details

The company in question is the NextEnergy Solar Fund (LSE:NESF). It’s a specialist solar energy and energy storage investment firm, listed on the FTSE 250. At present it has 102 different operating assets, which have a combined value in excess of £1bn.

Typically, the fund pays out quarterly dividends. It usually pays out the same amount each quarter for a year, then based on the annual results will increase it. One key thing is that the dividend cover (the amount by which any declared dividend can be covered by the latest earnings) is above 1. The latest forecast for the current financial year is a cover range of 1.1-1.3 times, so I have no concerns here, even though that’s not a huge margin of safety.

In the past year, the sum of the four dividends is 8.39p. Based on a share price of 68.8p, this gives a yield of 12.19%. Part of what makes this high is the increasing dividend per share. Yet the share price has also fallen by 20% over the past year. This also acts to push up the yield.

Forecasts for coming years

Looking forward, the market expects the quarterly payment to tick higher late next year to 2.2p. This should continue at that level for 2026, with the first payment of 2027 moving to 2.28p. So for the calendar year 2027, the total could be 9.12p (2.28 x 4). If I assumed the same share price as today, this would boost the yield to 13.26%.

There are a couple of points I need to flag here. First, even though the business has a track record of paying and increasing the dividends, there’s no guarantee this will keep going. Second, the share price assumption might not hold true. That far in advance, the stock price could be materially higher or lower than at present. This could mean the yield turns out to be even more, or less.

Risk, but reward too

I think the main risk stems not from the income but from the share price depreciation. It should track the net asset value (NAV) of all the solar assets. Yet the stock price currently trades at a 29% discount to the NAV.

Over the long run, this should rise to ensure the two prices are similar. The usual reason for the difference is negative investor sentiment around a company. I know renewable energy stocks have fallen out of favour recently, but I expect this tide to turn over the coming year.

On that basis, I think investors should consider adding this stock to their portfolio if they’re looking for a high-yield opportunity. It’s not a low-risk idea, but certainly does come with attractive income potential.