Clearway Energy (NYSE: CWEN)(NYSE: CWEN.A) offers investors a high-yielding dividend currently approaching 6%. That’s multiples higher than the S&P 500‘s (SNPINDEX: ^GSPC) dividend yield, which is near a 20-year low at around 1.2%.
The clean energy company has all the power needed to grow its dividend toward the upper end of its 5% to 8% annual target range through 2026. Because of that, it’s working to lock in dividend growth within that range for 2027 and beyond. It recently secured some new investments aimed to help power its next phase of dividend growth.
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Clearway Energy is executing a multiyear investment plan to grow its dividend in the upper end of its 5% to 8% annual target range through 2026. The company jump-started that strategy in 2022 when it cashed in on the value of its thermal assets, selling them to private equity giant KKR in a deal that brought in nearly $1.4 billion in net proceeds. It has been recycling that capital into higher-returning renewable energy investments.
The company has secured deals to put those proceeds to work in transactions that will close through 2026. That gives it the line of sight to grow its cash available for distribution (CAFD) to around $2.08 per share in 2025 and by 7.5% to 12.5% off that base in 2026.
That should support dividend growth of 6.8% next year and 6.5% in 2026. It expects to deliver that growth while keeping its dividend payout ratio in the 80% to 85% range. That level will give it some cushion while allowing it to retain cash to fund new investments.
Clearway Energy has been working to enhance and extend its growth visibility beyond 2026. It has been laying the foundation by signing contracts to sell power produced by its natural gas generation facilities at higher prices. It has already sold 93% of its capacity for 2026 and 63% for 2027, giving it more visibility into its future cash flows.
In addition, the company recently committed to invest $155 million into the Pine Forest solar plus storage project, which it expects to close in the second half of next year. The investment should generate $16 million in annual CAFD starting in 2026. That incremental cash flow will help support dividend growth in 2027.
Meanwhile, Clearway also recently agreed to buy the operational Tuolumne Wind Project. It expects to invest $70 million to $75 million in an asset that should add $9 million to its annual CAFD beginning in 2026. In commenting on the deal, CEO Craig Cornelius stated, “This acquisition is the next step in our path to meeting our long-term financial objectives, including our goal to deliver the midpoint or better of $2.40 to $2.60 in CAFD per share in 2027.”
