One of the most troubled sectors continues to draw investors.

6th February 2026

by Dave Baxter from interactive investor

Our monthly list of bestselling investment trusts tells many a tale, from the enduring popularity of growth funds such as Scottish Mortgage Ord  SMT

to the fact that bargain hunters have seized on the (briefly) wilting premium on 3i Group Ord  III

But it also shows us that one particularly battered Association of Investment Companies (AIC) sector, Renewable Energy Infrastructure, continues to draw in buyers after a horrific run of performance.

Greencoat UK Wind  UKW

 and NextEnergy Solar Ord  NESF

both sit in the top 10 list for January and seem to be a common addition to portfolios, what with their ultra-high dividend yields and wide share price discounts to net asset value (NAV).

But shareholders have been through the wars: rising interest rates (and bond yields) did huge damage to share prices across the sector in 2022.

All manner of problems, from a backlash against renewable energy to low wind speeds in the first half of 2025 and a broader crisis for the investment trust universe, have continued to hurt returns in the following years.

Renewable trusts come with bumper yields
Trust	Discount (%)	Dividend yield (%)
Aquila European Renewables Ord AERI3.55%	-46.9	19
NextEnergy Solar Ord NESF1.52%	-43.1	16.5
Foresight Solar Ord FSFL1.82%	-39.8	13.3
SDCL Efficiency Income Trust plc. SEIT1.42%	-43.5	12.7
Gore Street Energy Storage Fund Ord GSF0.00%	-39.1	12.7
Bluefield Solar Income Fund BSIF1.35%	-33.3	11.6
Octopus Renewables Infrastructure Ord ORIT1.96%	-40.4	11
Renewables Infrastructure Grp TRIG0.86%	-37.7	10.9
Foresight Environmental Infra Ord FGEN0.28%	-30.5	10.9
US Solar Fund Ord USF0.00%	-48.2	10.6
Greencoat UK Wind UKW0.31%	-27.3	10.6
Greencoat Renewables GRP1.61%	-30.2	9.8
VH Global Energy Infrastructure Ord ENRG0.28%	-34.8	8.3
Hydrogen Capital Growth HGEN0.00%	-43	0
Ecofin US Renewables Infrastructure Ord RNEW3.26%	-48.8	0
Aquila Energy Efficiency Trust Ord AEET0.80%	-45.6	0
Gresham House Energy Storage Ord GRID0.00%	-36.8	0

Source: AIC, 04/02/2026.

The sector took another hit late last year, thanks to the government’s mooted decision to switch the inflation linkage on certain renewable subsidies from the RPI measure of inflation to the lower CPI level. That would limit the revenue that renewable assets (and the trusts that have stakes in them) can generate.

The government confirmed its decision to go ahead with this option last week, although the news did in fact prompt the sector to rally. It’s worth asking what triggered this – and what bargain hunters buying the likes of UKW shares now need to understand.

Lesser evils – and the funds feeling the most pain

The sector rallied because the switch from RPI to CPI from April, while unwelcome, seemingly represented the lesser of two evils. The government had also considered temporarily freezing the subsidy level to make way for “a gradual realignment with the CPI”.

As the table below shows, some of the renewable trusts have substantial exposure to certain subsidy schemes and would see their NAV fall on the back of either change.

But the first option (now chosen by the government) is less harmful, with modest hits to NAV. While the damage is lessened, it’s the solar funds that are expected to take the biggest hit.

Estimated NAV impact of switching from RPI to CPI now vs a temporary freeze
Trust	Estimate of revenues from affected subsidies (%)	NAV change (%) from switching now	NAV change (%) from a temporary freeze
Bluefield Solar Income	50	-1.9	-9.9
Foresight Environmental Infrastructure	20	-0.3	-1.7
Foresight Solar	49	-2.2	-10.9
Greencoat UK Wind	40	-1.7	-6.1
NextEnergy Solar	45	-2.9	-10.3
The Renewables Infrastructure Group	15	-0.7	-2.5

Source: JPMorgan.

Buy or avoid?

As mentioned, there’s plenty to draw a bargain hunter in, from wide discounts to high yields.

In theory, we now have plenty of catalysts for a recovery: interest rates have been on a downward trend, high dividend yields mean investors are “paid to wait”, while such payouts are in most cases fully covered by earnings, and corporate action could also drive improvements. That could range from asset sales to mergers and buyouts.

Note, for example, that names such as Harmony Energy Income and Downing Renewables saw bids at decent premiums to share prices in the last year. That could prompt a recovery from depressed valuations.

It’s worth pointing out that not all specialists are keen on the sector at all, with Charles Murphy, senior research analyst at Singer Capital Markets, arguing that the underlying assets could ultimately prove hard to value in future, undermining the investment case.

Meanwhile, investors are seemingly overwhelmed with factors that complicate the picture, from shifts in power prices to bond yield moves and a political environment that looks increasingly hostile to the subsector.

As Hawksmoor’s Dan Cartridge adds, Reform UK is leading in the polls. “They have extreme negative views on the renewables sector,” he says. “That’s an ongoing reason for caution, although the next general election is still quite a long way off.”

Such considerations might understandably put off a potential investor. There are much simpler ways to bag a good yield, be it via a “core” infrastructure trust such as HICL Infrastructure PLC Ord  HICL

 (on roughly 7%), via equity income or via a UK government bond, whose 10-year instrument offers 4.5%.

Which trusts are the analysts favouring?

With the caveat that some may simply avoid a headache by not investing in the sector at all, trust brokers and analysts did pick out a few names they viewed as appealing.

Murphy, who as mentioned is generally pretty bearish on the sector, nevertheless views Foresight Environmental Infra Ord  FGEN

 as an interesting fund thanks to the fact that it’s so heavily diversified.

At the mid-point of 2025, the fund had a 27% allocation to wind power, with 14% in anaerobic crop digestion (where organic materials such as grass are broken down by microorganisms to produce renewable energy), 12% in solar power, 10% in biomass and smaller allocations to areas such as low-carbon transport and energy storage. The trust can have an eclectic mix of assets, with these including a fish farm in Norway.

Hawksmoor’s Cartridge is also a fan of Foresight’s diversification, while pointing to other trusts which have a good spread of assets and “where overall cash-flow profiles are more defensive” – for example with strong solar power generation last year to offset the falls suffered in wind generation. Here, he points to Octopus Renewables Infrastructure Ord  ORIT

 and the Renewables Infrastructure Grp  TRIG

To briefly linger on these names, ORIT unveiled something of a turnaround plan in September where it promised to continue and extend its share buyback programme, look to reduce its debt, sell down some assets and make selective new investments.

TRIG sought to roll into stablemate HICL last year, a plan that ultimately fell apart after it caused a stink among HICL investors. However, this drama may have alerted investors to the existence of TRIG as a possible takeover target.

The case for Greencoat UK Wind

Meanwhile, Greencoat UK Wind remains popular with the professionals, much as it does with ii customers.

Cartridge notes that it has “a unique funding model that has been successful over a long time”, while Peel Hunt’s Markuz Jaffe adds: “We like Greencoat UK Wind for the pure-play domestic strategy. It remains simple and is perhaps most exposed to the subsidy amendment but is linking [dividends] to inflation even if that’s now CPI rather than RPI.

“It has been a leader in trying to address the discount, via buybacks, changes to management fees and recycling capital to reduce gearing.”

The Peel Hunt team also has an eye on Bluefield Solar Income as a tactical opportunity, with a focus on how its sale process and strategic review is progressing. The trust is expected to give an update when it publishes its interim results in March. Jaffe notes that its peer, Foresight Solar, also looks interesting because of this.

“The portfolio is quite vanilla, it’s on a wide discount and its closest peer is going through a sale process, so there’s reason to expect a catalyst for a material rerating in the shares,” he says.

Not all rosy

An improving environment does not guarantee a recovery. Note, for example, that interest rates have already been falling over the last year, with no discernible rebound for most of the trusts in this sector. And investors may want to tread carefully.

Cartridge notes some caution on certain specialist names, for example. He points to ii customer favourite NextEnergy Solar, noting that the dividend yield at the NAV level is “higher than the discount rate, pointing to it being unsustainable” and Bluefield Solar.

When it comes to NESF, it does have one of the highest yields in its sector.

However, the board has been in the midst of a strategic review “exploring all options to close the current discount”. Options discussed include exploring “opportunities to enhance shareholder returns” and upping the level of capital recycling. The findings of the strategic review are due out this year.

As ever, specialist funds tend to carry greater volatility than generalist options and can reward and punish adventurous investors in equal measure.

The battery storage funds have taught us that: the two remaining names, Gore Street Energy Storage Fund Ord  GSF

 and Gresham House Energy Storage Ord  GRID

suffered huge losses in earlier years but staged a fierce comeback in 2025. One factor here was the sale of rival fund Harmony Energy Income.

How much do I need in a Stocks and Shares ISA to earn a £300 monthly passive income?

James Beard considers the passive income potential of a Stocks and Shares ISA

Posted by James Beard

Published 7 February

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

It’s estimated that approximately 15% of UK adults have a Stocks and Shares ISA. Many of these individuals will be using them to buy dividend shares to help provide a second income. As an added bonus, this cash can be enjoyed tax-free.

So without having to work for it, how much would someone need in an ISA to earn an extra £300 a month ? Let’s take a closer look.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

What’s achievable?

The answer to this question depends on the level of return achieved. For example, the FTSE 100 currently (5 February) has a historic yield of 3.1%. With a return like this, an ISA would have to be worth £116,129 to meet our £300 a month target.

But I reckon it’s possible to achieve a higher return by carefully choosing a diversified selection of high-yielding stocks. The 10 highest on the index are currently offering 6.4%, meaning our portfolio would need to be worth £56,250 to achieve our objective.

Of course, dividends cannot be guaranteed. However, there are plenty of stocks that have a long history of steadily increasing their payouts and offering above-average returns

The plan for the SNOWBALL

The current plan for the SNOWBALL is 10k but hopefully we are on target for £10,441.49.

The dividend journey for the SNOWBALL

2023 £9,422

2024 £10,796

2025 £11,914

It’s better to set an achievable target and then try to beat the target which all depends on Mr. Market.

Remember your Snowball should be different to the

as it should reflect the years you have before retirement.

SNOWBALL SHARE NESF. Not buy advice DYOR

Have we seen

How much do I need in my ISA for a £1,000 monthly passive income?

Picking high-income stocks in an ISA can be a route to securing long-term passive income.

Posted by Alan Oscroft

Published 5 February

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

The ability to invest up to £20,000 per year in an ISA and not pay a penny tax on the passive income it can generate can be life-changing.

In the 2023/24 financial year, the latest for which we have the numbers, UK adults held 15m ISA accounts. And the total cash invested in those ISA accounts came to £103bn ! So we’re a nation of canny savers and investors, right ? Well, we need to dig a bit deeper.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Pick the right one

Of those 15m ISA accounts, 9.9m were Cash ISAs — and only 4.1m were Stocks and Shares ISAs. Cash ISAs held £69.5bn, but only £31.1bn — less than half that amount — went into Stocks and Shares ISAs.

Cash ISAs can be a great way to protect some emergency cash or short-term savings. And for folks who really don’t want any stock market risk at all, the guaranteed returns offer a safer option. But over the long term, Stocks and Shares ISAs have wiped the floor with the Cash ISA alternative.

The top Cash ISA interest rates are currently a bit above 4%. And that’s actually not bad at all. But over the past 10 years, the average annual Stocks and Shares ISA return has come in at a whopping 9.6%.

The difference it can make

The total sum we’d need to build up depends on the rate of return we can achieve.

From that 9.6% Stocks and Shares ISA return, around £132,000 should generate enough passive income to cover our target £1,000 per month. And investing £500 per month with all dividends reinvested, we could get there in 12 years.

To get the same from a 4% Cash ISA return, we’d need more than £320,000. And at that interest rate, it should take 29 years to build that up.

To be fair, that 9.6% from shares has been above average for shares in general. But the 4% from cash can’t be maintained when Bank of England (BoE) rates come down. I can easily see Cash ISA interest getting down below the BoE’s 2% inflation target. To take home £1,000 per month from a 2% return, we’d need more than £600,000 — and 56 years to get there.

The target for the SNOBWALL is a return of 10% on seed capital of 100k. Hopefully in 2 years time it will earn income of 1k per month.

Your Snowball should be different to mine, to reflect you risk profile and how many years before you want to spend your dividends instead of re-investing them. Depending on how many years you have to re-invest your dividends there may be surplus income that you could continue to re-invest with.

Monthly Dividend Superstars:

11% Average Annual Yields

Most investors with $600,000 in their portfolios think they don’t have enough money to retire on.

They do – they just need to do two things with their “buy and hope” portfolios to turn them into $5,000+ monthly income streams:

1. Sell everything – including the 2%, 3% and even 4% payers that simply don’t yield enough to matter. And,
2. Buy my favorite monthly dividend payers.

The result? More than $5,000 in monthly income (from an average annual yield just over 11%, paid about every 30 days). With potential upside on your initial $600,000 to boot!

And this strategy isn’t capped at $600,000. If you’ve saved a million (or even two), you can just buy more of these elite monthly payers and boost your passive income to $9,166 or even $18,333 per month.

Now we’re talking!

But if you’re a billionaire, sorry, you are out of luck. These Goldilocks payers won’t be able to absorb all of your cash. With total market caps around $1 billion or $2 billion, these vehicles are too small for institutional money.

Which is perfect for humble contrarians like you and me. This ceiling has created inefficiencies that we can take advantage of. After all, in a completely efficient market, we’d have to make a choice between dividends and upside. Here, though, we get both.

Inefficient Markets Help Us

Bank $100,000 Annually (per Million)

Fortunately for you and me, the financial markets aren’t 100% efficient. And some corners are even less mature and less combed through than others.

These corners provide us contrarians with stable income opportunities that are both safe and lucrative.

There are anomalies in high yield. In an efficient market, you wouldn’t expect funds that pay big dividends today to also put up solid price gains, too.

We’re taught that it’s an either/or relationship between yield and upside – we can either collect dividends today or enjoy upside tomorrow, but not both.

But that’s simply not true in real life. Otherwise, why would these monthly payers put up serious annualized returns in the last 10 years while boasting outsized dividend yields?

For example, take a look at these 5 incredible funds that pay monthly and soar:

This is the key to a true “Monthly Payer Portfolio” – banking enough yields to live on while steadily growing your capital. It’s literally the difference between dying broke and never running out of money!

But I’m NOT suggesting you run out and buy these funds.

Some have been on my watchlist and in our premium portfolios over the years, but I mention them only as examples of the potential ahead.

And get paid every month, too.

Our 8.6% Dividend Play on a “REIT Revival” by Michael Foster, Investment Strategist A multi-year disconnect in high-yielding REITs is about to turn on its head. When it does, these solid income plays are poised to shoot ahead of stocks. I’m talking about a quick reversal of pretty well everything investors thought had REITs left for dead, interest rate trends and the work-from-home shift among them. Now is the time to buy. And we contrarian income investors know the play: At times like these, we look to 8%+ paying closed-end funds (CEFs) to reap the strongest dividends and potential upside. I say this as REITs, long-time market outperformers, have been stuck in an unusually long slump. Remember when stocks ricocheted hard after the early days of the pandemic? REITs (with their benchmark ETF shown in purple below, compared to the main S&P 500 ETF, in orange) rebounded, too. But not nearly as much. REITs’ Slow Recovery  Why REIT Headwinds Are Diminishingand Setting Up to Reverse There are lots of reasons why REITs have lagged in the last six years, and none of them are really secrets: Work-from-home hit office demand. Interest rates jumped, hitting REITs’ bottom lines, as these companies borrow heavily to invest in their properties. Lower immigration into the US also had an effect on both housing and workspace demand. That last point – immigration into America – still applies. But both of those other barriers, which are far more meaningful, have either flipped or are in the process of doing so. Work-from-home? It’s largely been replaced by either a full-time return to the office or hybrid work. Interest rates? This is where things get intriguing. Rates Fall, REITs Start to Respond  REITs, as mentioned, borrow to invest in real estate, so rate cuts go straight to their bottom lines. The cuts the Federal Reserve has delivered since mid-2024 (in orange above) have come more slowly than markets expected. So it follows that the boost to REIT profits, and therefore their share prices, is real (purple line), but smaller than investors hoped. That leaves REITs in a strong position – still underpriced, but starting to show momentum. And with the first month of 2026 now behind us, we can see the current state of play here: REITs Nearly Reeled In Stocks in January  As you can see, in January, REITs (again with their benchmark in purple above) almost met the stock market’s returns. Now, one month does not make a trend, but that’s a switch from what we saw in 2025, when the S&P 500 gained over 17% and RWR returned a mere 3.2%. The takeaway: The lead stocks have held over REITs is finally starting to fade. And if interest rates fall faster than the market expects – quite possible if President Trump’s nominee for Fed chair, Kevin Warsh, is confirmed – REITs could not just match the S&P 500 but beat it this year. That would finally end REITs’ six-year lag. Let’s buy in before that happens. How? My favorite avenue is through those aforementioned CEFs. Consider, for example, the Cohen & Steers Total Return Realty Fund (RFI), a holding in my CEF Insider service that yields 8.6% as I write this. The fund is a solid play here, thanks to that 8.6% dividend, which has been rock-steady for years. The fund pays that dividend monthly, to boot.  Source: Income Calendar RFI is also nicely diversified, boasting a portfolio that gives us exposure to AI’s infrastructure needs, with significant weightings in data center and communications (think cell-tower) REITs.  Source: Cohen & Steers It also holds industrial REITs, giving us broad exposure to both the reshoring and automation of factories. That top allocation to healthcare is also a plus, letting us tap into the aging of the US populations – a trend that still has decades to run. Finally, its allocations to bonds and preferred shares add stability. The fund is cheap, too. As I write this, we can buy RFI at a 0.5% discount to net asset value (NAV, or the value of the fund’s portfolio). I know that doesn’t sound like much of a deal, but it’s far below the premiums at which RFI traded for most of last year: The kicker? That “small” discount is also well below RFI’s average premium of 3.7% over the last five years. That makes now a good time to buy this overlooked bargain, before other investors pick up on the many tailwinds shifting in RFI’s favor. 5 More “Built-for-2026” Income Plays You’re Not Too Late On (Yields Up to 10.7%) CEFs are, hands-down, the top plays on disconnects like the one we’re seeing shape up with REITs today, for three reasons:CEFs pay us (mostly) in cash, thanks to their rich dividends (around 8% on average).CEFs give us a double discount – on both washed-out stocks (or in this case REITs) themselves and on the fund itself through its discount to NAV.CEFs put our investments in the hands of a professional who knows their asset class inside and out.