Finding the good FTSE250 Stocks of profitable companies are not as plain as some might think. It is true that the index has a higher average yield than FTSE100but this does not mean that all companies achieving above-average profitability are sustainable. However, after some digging, I think I found a good one. What are the details?

Light bulb moment

I’m talking about Renewable Infrastructure Group (LSE:TRIG). Over the last year, the company’s shares dropped by 9%, but the dividend yield was 10.44%.

The group owns renewable energy projects including onshore and offshore wind farms, as well as solar parks spread across the UK and parts of Europe. Instead of building speculative projects from scratch, the company mainly buys operating assets that already produce electricity. This means that investors are effectively buying part of a giant pristine energy company.

The company then makes money by selling the electricity produced by these assets in the market. Some of the revenue is tied to wholesale electricity prices, while much of it comes from long-term government-backed subsidies and fixed-price contracts. This combination matters because it provides the company with a relatively predictable revenue stream. This brings us nicely to the dividend.

Sustainable dividend

From the very beginning, the group was designed as a profitable company. Management aims for consistent dividend growth and backs it with assets that can generate cash for decades. Wind and solar farms may require upfront investment, but once operational, operating costs are relatively low. As a result, much of the revenue may ultimately be returned to shareholders.

Right now, its yield of 10.44% makes it one of the most attractive options on the FTSE 250. However, I believe it is sustainable because its dividend cover is 1, meaning earnings per share cover the dividend. This means that the company pays out within its means.

The long-term prospects also seem encouraging. Governments across Europe continue to aggressively push for energy independence. Recent conflicts around the world are showing policymakers how critical household energy production really is. I believe this makes renewable energy (as the company does) a strategic necessity.

At the same time, electricity demand could enhance significantly over the next decade due to other factors such as electric vehicles and AI data centers. Greater demand for electricity is again favoring renewable infrastructure.

Talking numbers

If someone invested PLN 2,000 today pounds in shares, even without investing a penny more, this could accumulate over time through dividend reinvestment. After 15 years he could be paying out £938 a year. It’s true that waiting may take too long. In this case, in addition to 2 thousand pounds, adding an extra £200 a month could speed up the process. In this scenario, it could take as little as three years!

Of course, there is no guarantee of this, as the company may encounter problems that will result in a dividend cut. If interest rates rise in the UK this year, it will raise the cost of financing up-to-date projects, which could eat into profits. It’s risky going forward, but overall I think it’s a good profitable stock that investors should consider.

Is it worth investing £5,000 in Renewables Infrastructure Group now?

If investing expert Mark Rogers and his team have stock advice, it can pay to listen. After all, Twelfth Magpie’s flagship Share Advisor newsletter, which it has run for almost a decade, provides thousands of paying members with the best share recommendations from across the UK and US markets.

Mark believes there are 6 standout stocks that investors should consider buying right now. Do you want to check if the Renewable Infrastructure Group is on the list?

Jon Smith has no position in the stocks mentioned.