Dividend stocks are a fantastic way to start earning passive income. Fortunately for UK investors, there are plenty of high-yield opportunities to pursue with high quarterly dividends. One stock that is proving to be quite lucrative for my income portfolio is Greencoat wind in the UK (LSE: UK).

The renewable energy investment trust (REIT) has lost a lot of investor love as higher interest rates and falling energy prices put pressure on profits. And yet, despite these difficulties, the company continues to pay inflation-linked dividends to shareholders, currently offering a staggering yield of 9.3%.

That’s almost three times more than that FTSE100 index investors are making money right now. So is it a no-brainer purchase right now?

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Tasty earning potential

Let’s assume the goal is to earn the equivalent of £500 a month in passive income, or £6,000 a year. Looking at Greencoat, with a dividend per share of 10.18p, this means an investor would need to buy approximately 58,939 shares.

At the current share price of 110p, this means you would need to invest £64,833 in Greencoat shares. This is obviously quite a enormous lump sum, but much less than the approximately £187,500 currently needed to earn the same passive income via a FTSE 100 index fund.

Moreover, with such a enormous payout, investors could easily reach this milestone over time, and the journey would be accelerated if management continued its policy of increasing the dividend.

But if this is the case, why aren’t more investors jumping on this apparent gold mine as an income investment?

Risk versus reward

Despite my relatively bullish stance on this stock, it is definitely one of my riskier income positions.

As mentioned earlier, the renewable energy space is currently facing increasing levels of uncertainty. And although Greencoat is one of the largest players in the UK, the company still has some feeble points that could prove problematic depending on macroeconomic developments.

Perhaps the biggest problem at the moment is the group’s high degree of financial leverage. Greencoat applies a self-imposed leverage limit of 40% to prevent its balance sheet from being over-leveraged. Earlier this year, the group surpassed that limit, albeit temporarily.

The management board managed to reduce part of the debt by selling assets. However, this also means that its energy production capacity has decreased, which negatively affects its ability to generate cash flow.

Is this a sedate problem? Currently no. Despite unfavorable conditions and debt levels, dividend and interest payments are still satisfactorily ensured. However, the margins are smaller compared to a few years ago.

Further reductions in interest rates will aid alleviate some of this pressure. However, as wind speeds decline and energy prices decline, it is possible that the benefits of lower rates will eventually be offset by these headwinds.

The most crucial thing

As the value of dividend stocks declines, Greencoat’s track record remains impressive. The company has proven to be much more resilient compared to other players in the industry. And with the UK government seeking to dramatically expand the country’s renewable energy infrastructure, the company appears well-positioned to benefit from these political tailwinds.

Couple this with a huge cash flow backed profit and I’m the reason I continue to be a shareholder despite the increasing risk levels. But these aren’t the only dividend stocks I’ve come across this month.