I followed Greencoat wind in the UK (LSE: UKW) because it is one of the most promising renewable energy companies on the market FTSE250.

The massive attraction is the yield, which has recently risen to just above 10% – a goldmine for income investors.

But as always, the question is whether this income stream is reliable. I decided it was time to take a closer look.

What the business does

Greencoat UK Wind invests exclusively in the operation of UK wind assets, which include onshore and offshore farms. This is crucial because it avoids the risk of outage that occurs with early-stage renewable energy projects, where delays and overruns can hurt returns.

The declared aim of the trust is to pay an annual dividend that increases in line with inflation, while maintaining the value of the capital in real terms.

Here are some quick stats:

Apart from a miniature break in 2024, the company has increased its dividend for 12 years in a row, paying out dividends worth £1.4 billion since its IPO. This is exactly the kind of credibility that investors need in terms of income: dividends backed by a long track record, not just a sudden spike in yields.

So far so good. But is that the whole story?

What I like about the magazine

The issue of income is uncomplicated. Greencoat UK Wind is targeting an inflation-linked dividend, and in its 2025 annual results presentation it gives a target of 10.70p per share in 2026. This would represent an boost of 3.4%, in line with the December 2025 CPI.

In the presentation for the first half of 2025, it showed that profits covered the dividend 1.3 times. That’s not bad, but if profits fall further this year, it may be complex to maintain this level.

This is the most crucial thing that investors need to pay attention to. A 10% yield sounds great, but if the trust can’t cover it, the dividend is at risk. There is some consolation in the fact that robust cash generation and reinvestment have kept things going in the past.

Generally, for stocks with a 10% yield, coverage is above average but not solid.

Other threats worth watching

The elephant in the room is the share price. It’s down 22% over the last five years. Estimates suggest it is currently trading at a discount to NAV of 23-29%. The 2025 results presentation showed NAV per share falling to 133.5p following an updated review.

This tells me that sentiment is impoverished even if the underlying assets remain productive.

The risk is real. Wind power generation fluctuates, energy prices may fall, debt costs matter and policy changes may hit the sector. The company itself recorded below-budget energy generation in 2024 and 2025 and pressure resulting from energy price assumptions.

In miniature?

While I think UK Wind is a solid company – and I would love to see it succeed – it operates in a very demanding industry. As a result, the 10% yield remains on less than stable foundations.

For investors looking to endure volatility, this is worth considering, but only as a diminutive allocation. Personally, I will hold off until the sector stabilizes.

If you also think this is a bit risky, I have identified another profitable stock that may offer more stable and predictable returns.

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Mark Hartley holds no position in the companies mentioned.