What does a forecast dividend yield above 11% say about the stock? My immediate thought is that income investors should take a closer look. But I also remember that an unusually high dividend yield can mean something has gone wrong.

I’m talking about Renewable Infrastructure Group (LSE: TRIG), although I’m not sure anything fundamentally bad actually happened.

What is this?

The company describes itself as “AND FTSE250 an investment company that seeks stable income and long-term capital growth through a highly diversified, cash-generating portfolio of renewable infrastructure assetsThis includes onshore and offshore wind farms, solar energy installations and battery storage projects in the UK and across Europe.

As of December 2025, the investment fund had a reported net asset value (NAV) per share of 104p. With a share price of 68p at the time of writing, this represents a massive 35% discount to NAV.

When a stock appears undervalued, it may present an opportunity to buy it back. And that’s exactly what’s happening now. Following the publication of results for the 2025 financial year in February, the board announced a up-to-date share buyback program worth £150 million.

Oh, and the board has maintained its 2026 dividend target at 7.55p. This represents 11.1% of the current share price.

What to pay attention to

Being cautious, related news brings to mind a few potential shadowy clouds. I’m thinking about another FTSE 250 mutual fund SDCL Performance Income Trustwhich this month announced it was coming to an end.

The debt has grown beyond the self-imposed limit. Attempts to reduce gearing by selling assets have failed. The trust was unable to approach estimated book values. It doesn’t appear to be a seller’s market for energy resources at the moment, with the possible exception of oil.

At the end of 2025, Renewables Infrastructure’s total debt was approximately £2 billion. The market capitalization of the stock is just around £1.6 billion. At least net debt isn’t that high, so hopefully it won’t come back to bite investors.

However, if there is a need to divest in the future, can the December NAV be analyzed? And won’t the discount suddenly look less attractive?

During the financial year, Chairman Richard Morse spoke of “a challenging year influenced by political uncertainty, low wind energy resources and lower energy price forecasts, all of which weighed on the company’s valuation“.

Bright prospects

Forecasts indicate positive prospects, and earnings per share will slowly enhance until 2028. By then, we can expect a price-to-earnings ratio (P/E) of just 8.5. Please note that there is one immediate note.

Analysts don’t expect the dividend to be covered by profits in 2026 or 2027. And by 2028, we’ll only be modestly covered. Despite this, we are not currently in favorable times for alternative energy sources and short-term sentiment is frail.

One of the company’s priorities is “restoring dividend coverage to historical levels“And if the next few years go as expected, this is certainly something to consider ahead of the next turn in global energy policy that surely must come.