2 magnificent income stocks investors should buy and hold for at least a decade!

Income stocks form many portfolios. After all, investing in growth can be risky – many new companies fail. So I have about five or six dividend-paying companies in my portfolio for every growth stock.

But today I’m looking at two income stocks, in very exciting industries, that offer good returns and modest growth. Both of which I recently purchased.

So let’s take a closer look at these two stocks.

Greencoat UK Wind

Greencoat UK Wind (LSE:UKW) is a private investment company. Trust management aims to provide investors with an annual dividend that increases in line with retail price index inflation while maintaining the capital value of the investment.

To begin with, I think that increasing the dividend in line with inflation will be a challenge in the current environment. But the renewables infrastructure fund confirmed on Thursday that it would lift its dividend to 7.72p from 7.18p in 2022, with a dividend target of 8.76p in 2023, in line with RPI.

Greencoat UK Wind, as the name suggests, invests in UK wind farms. These farms, numbering 46, produce clean electricity, which is sold to energy suppliers to power homes.

With investments and holdings in assets in England, Scotland, Wales and Northern Ireland, Greencoat has an aggregate net capacity of 1,289.8 megawatts. Enough energy to power 1.5 million homes.

The stock is currently trading at a 2.3% discount to net asset value and has a price-to-earnings ratio of seven – about half FTSE 100 average. The current dividend yield is around 4.8%, but the forward yield is even better, around 5.4%. Coverage is very strong 3.2 times, after the generation net cash came in at £560m.

Greencoat is putting £340m into new ventures by 2022. This is exciting as UK wind is a very attractive market at the moment. In fact, onshore wind is a low-cost form of energy generation in the country.

Investors will be concerned about the Electricity Generator Levy – a tax on the extraordinary income of electricity generators. But, for the most part, I think the neighborhood is still attractive. I also hope to end the UK onshore wind moratorium. This should allow Greencoat to invest in higher wind power.

NextEnergy Solar Fund

NextEnergy Solar Fund (LSE:NESF) is an investment fund focused on solar energy infrastructure assets. The asset produces around 865MW of energy, by the end of 2022.

The fund offers investors an attractive 6.5% dividend yield. In fact, as a real estate investment trust, NextEnergy must distribute 90% of its taxable profits to shareholders.

In some ways that’s good, especially with energy prices rising. However, this suggests that the trust will need to use debt to finance growth. I am not always a fan of this, but I am comforted by the attractive nature of the industry.

And contrary to popular opinion, solar panels are very effective, even in cloudy conditions. In fact, rain can even improve the performance of the panel, removing dust.

Overall, the fundamentals here are strong, with a P/E of nine. Hopefully, the new government policy will increase investment incentives in the sector.