A 12.65% yield? Here’s the dividend forecast for this FTSE income share
We might have only just inched into 2025, but looking ahead to 2026 and 2027 provides the opportunity for investors to weigh up dividend forecasts for potential shares worth purchasing.
One company with a high-yield looks like it could increase even more in the next couple of years. Here are the details for consideration.
Renewable energy gains
The firm in focus is the Foresight Solar Fund (LSE:FSFL), a member of the FTSE 250. Its management team’s focused on generating income for investors by owning and managing a portfolio of solar energy assets. More specifically, it makes money from the sale of electricity generated by its solar farms, mostly via power purchase agreements (PPA) with suppliers.
Over the past year, the share price is down 30%, with the dividend yield at 11.2%. The current yield makes it one of the highest income options in the entire index.
It typically pays out a dividend each quarter, and increases the amount per share once a year. For example, in 2022 it was 1.74p, in 2023 it rose to 1.78p, and for the past few quarters it’s been 2.0p.
This trajectory’s appealing for income investors, as there’s a track record of increasing payments, which in turn helps to increase the dividend yield (assuming no wild movements in the share price). The dividend cover’s currently around 1.0. This means that the earnings fully cover the dividend payment. This is a good sign.
Looking forward
According to analyst expectations, the upcoming June declared dividend could rise to 2.1p per share. In June 2026, this is expected to rise to 2.19p, with June 2027 at 2.27p.
So if I assume the share price stays at 70.5p, this could mean the yield for calendar year 2026 would rise to 12.17%. For 2027, this could rise to 12.65%.
Of course, I do need to be careful when looking out for the next two years. It’s unlikely the share price is going to stay at the same level. If the stock falls, the yield will increase further. But if the share price jumps, then the yield could be lower than my forecasts. So investors need to take things with a pinch of salt!
Noting down concerns
There are risks associated with this stock to be aware of. For example, the drop in the share price over the past year has been attributed to lower power prices. This cuts the revenue potential for the company. Further, these large-scale solar projects are partly financed with debt. The fact that interest rates have stayed higher for longer in the UK means future borrowing will be more expensive than previously planned.
Even with these risks, the yield’s very attractive. If investors are aware of the potential concerns, I think it would be a good income stock to consider for the coming few years.
The post A 12.65% yield? Here’s the dividend forecast for this FTSE income share appeared first on The Motley Fool UK.
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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Foresight Solar Fund. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
