Clearway Energy: On The Verge Of A Dividend Hike With A Long Growth Runway Ahead

Seeking AlphaDividend IdeasClearway Energy: On The Verge Of A Dividend Hike With A Long Growth Runway AheadJul. 13, 2020 11:11 AM ET|| About: Clearway Energy, Inc. (CWEN), CWEN.A, Includes: AVA, PCGby: Cashflow CapitalistCashflow Capitalist High Yield LandlordBecome a “Passive Landlord” with our 8% Yielding Real Estate Portfolio.SummaryCWEN is a renewable energy yieldco sponsored by a growing energy infrastructure developer.
Despite being temporarily hurt by the bankruptcy of PG&E, the company's future looks bright with a decades-long growth runway and numerous potential drop-downs from its sponsor.
The company's business model is somewhat similar to that of a net lease REIT, with long-term contractual revenue streams backed by creditworthy customers.
CWEN issues a simple 1099-DIV form for tax purposes rather than a more complicated K-1 form.
The stock currently yields 3.63%, but that yield could soon jump up significantly after restricted cash due to the PG&E bankruptcy is released.

Investment Thesis
Clearway Energy, Inc. (CWEN) is a renewable energy yieldco sponsored by the experienced renewable energy developer, Clearway Energy Group, which is sponsored by its controlling investor, Global Infrastructure Partners. It owns a 7,000 megawatt portfolio of clean energy assets (wind, solar, and natural gas pipelines) operating under long-term contracts with reliable customers.
CWEN was significantly impacted by the bankruptcy of California utility company, Pacific Gas & Electric (PCG), often referred to as PG&E. As the utility company entered bankruptcy, CWEN was forced to cut its dividend by 40% due to restricted income from power purchase contracts with PG&E. The accrued restricted cash amounted to $148 million at the end of the first quarter. Compare that to expected cash available for distribution ("CAFD") for 2020 of $310 million. Once the trapped cash from PG&E is released, CWEN will enjoy a massive... Read more