What makes a good retirement portfolio?

The answer will be different for every investor. From time frame to risk tolerance, different people have their own idea of ​​how to prepare themselves financially for their retirement.

One thing that many people like is stocks that they believe can give them generous dividends.

But dividends are never guaranteed to last. When an investor salivates over a high return (or any return), he should always ask himself how likely it is that it will continue.

10%+ returns in the FTSE 250

For example, a number of FTSE 250 index Renewable energy-related stocks currently provide double-digit percentage returns.

For example, Green poncho uk wind (LSE:UKW) is currently at 10.7%.

As if that’s not enough, earnings per share have increased annually in recent years.

So, what’s going on with high-yielding renewables stocks?

Each stock must be looked at individually

The fact that multiple renewable energy stocks currently offer high returns indicates concerns some investors have about the sector.

There is a risk that uncompetitive production costs could mean that the business model becomes less attractive, especially if fossil fuel prices fall. Lower potential selling prices are also a concern.

But while a high-level view can be helpful when evaluating a potential area of ​​investment, it’s always important to consider each stock individually on its own merits as well.

A well-constructed retirement portfolio is diversified not only across multiple stocks, but across different business areas as well. It must also include a long-term vision. After all, retirement can last for decades.

So, regardless of today’s dividend, an investor will also want to consider how sustainable it is for the future.

Dividends are well covered

In the first half, Greencoat UK Wind’s net cash generation covered its earnings costs by about 1.4 times.

Its net asset value at the end of June was around £1.43 per share – but its share price is currently in pennies.

With proven cash generation potential and generous dividends, I think the stock has some things going for it. But its price suggests that at least some investors have questions about whether the dividend can continue to flow. After all, a double-digit payout ratio is unusual.

The company has been active in buying back its own shares. Given the gap between its recently reported net asset value and the current share price, this could create value for shareholders.

However, the net asset value partly depends on energy prices. If expected energy prices decline, the value of power generation assets also declines. I believe this is a risk that could continue to impact Greencoat UK Wind’s net asset value – and the share price.

However, although there are risks, I also see the potential for rewards here. Balancing risk and reward is important for any investor and certainly so when it comes to a retirement portfolio.

All things considered, I see this as a stock that investors should consider.