Clearway Energy’s Price Dip: 3 Reasons It’s a Signal to Buy
Clearway Energy (NYSE: CWEN) is an interesting play on energy production. The company focuses on renewable green power sources such as wind, solar, and water. With a diversified and growing portfolio of solar, wind, and storage assets, Clearway not only contributes to a sustainable energy future but also delivers consistent cash flow to support an attractive dividend.
As of September 2025, Clearway Energy offers a forward dividend yield of over 6%, making it a very interesting stock for income and dividend growth investors. The company tends to increase its dividend quarterly; now, the question is whether the yield is sustainable and if the September price pullback is a good time to buy.
Here are three compelling reasons why CWEN's recent price weakness presents a potential buying opportunity for long-term invesotrs.
1. Dividend Growth Backed by Strong Free Cash Flow
Clearway Energy raises a red flag immediately with a dividend payout ratio above 100%, but this is not the figure investors should focus on. This company pays its dividend out of free cash flow, otherwise known as distributable cash or, as the company phrases it, cash available for distribution of CAFD.
The payout ratio is much better on a CAFD basis, running in the range of 70% to 80% and expected to remain there for the foreseeable future. This is a critical factor as the company’s revenue is forecasted to grow at a mid-single-digit pace through the decade's end (likely longer), with earnings growing at an accelerated rate thanks to cost efficiencies and strategic growth initiatives.
There is a risk of dilution, but it is slight. Clearway recently entered into a $100 million ATM offering that will increase the count by about 1.7% in addition to the low single-digit increase posted for FQ2.
Other than that, the balance sheet highlights are healthy and support the outlook for dividend payments, including steady equity and low leverage despite increased debt use tied to acquisitions.
2. Expansion Plans and Upgrades Fuel Long-Term Growth
Clearway has a clear growth path, supported by its cash flow, available free cash flow, and balance sheet health. The combination enables reinvestment in the business, including upgrading existing facilities, investing in new ones, and acquiring others.
Client contracts and agreements, including local stand-alone industries such as hyperscaler data centers and backup utilities. The 2025 acquisitions include facilities in Washington (state) and California, while new facilities include wind, solar, and storage in Utah, California, and Texas.
The repowering projects are also drivers of future growth and margin. These include projects in Texas and West Virginia that will upgrade old, worn-out equipment with newer, more efficient models that will increase output and efficiency while extending their lifespans.
The projects are also expected to drive new business and contract extensions with existing clients, strengthening and extending line-of-sight for dividend distribution payments.
3. Analyst and Institutional Support Strengthen the Bull Case
The sell-side statistics, including the analysts, institutions, and short sellers, are positive and suggest broad-based support for this stock. The short-sellers are not interested, which is a good sign for its financial health and outlook, while institutions and analysts are buying.
The institutional data reveals more than 85% ownership; they have been buying on balance all year. The Q3 data aligns with this trend, with buyers outpacing sellers by more than two to one dollar-for-dollar.
Regarding the analysts, the six tracked by MarketBeat rate the stock as a Moderate Buy with bullish bias with a price target is rising in 2025. The consensus of $36.40 forecasts a 25% upside as of mid-September, while revisions lead to the high end of $39.
A move to the consensus is sufficient for a multi-year high and sets the stage for this market to retest resistance at the all-time high. Coincidentally, the all-time high aligns with the analysts’ high-end range and may not provide much resistance if the institutional and analysts trends remain intact.
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