1 Magnificent High Yield Stock Down 33% to Buy and Hold Forever

The stock market’s recent volatility has created opportunities for long-term investors willing to look past short-term noise. Among the candidates, Clearway Energy, Inc. (CWEN.A) stands out as a high-yield dividend stalwart that’s dipped nearly 33% over the past quarter due to macroeconomic pressures—yet remains fundamentally sound for a buy-and-hold strategy. Here’s why this renewable energy giant could be your next forever stock.

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Why Clearway Dropped 33%: A Perfect Storm of Short-Term Concerns

Clearway’s recent pullback reflects broader market fears: rising interest rates, geopolitical instability, and concerns over the pace of renewable energy adoption. Investors priced in risks like weaker utility demand and higher borrowing costs, sending the stock down 33% from its late-2024 peak (as of April 2025). However, these worries are overblown.

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The Bull Case: Strong Balance Sheet + Inflation-Proof Cash Flows

Clearway’s dividend yield of 6% (as of April 2025) isn’t a gimmick—it’s backed by decades of stable cash flows from long-term power purchase agreements (PPAs) with utilities. These contracts, averaging 20+ years, insulate the company from short-term energy price swings.

Key fundamentals supporting this thesis:
1. Rock-Solid Balance Sheet:
- Debt-to-EBITDA ratio of 3.5x (well below industry averages).
- $9.9 billion EBITDA in 2024, funding a $1.1 billion share buyback program and 5% annual dividend hikes.
- Analysts at Deutsche Bank rate its credit profile BBB+, noting “minimal refinancing risks” for its debt maturities.

1. Growth Through Renewable Expansion:
2. Acquired the 137 MW Tuolumne Wind Project in Q1 2025, boosting its renewable portfolio to 9 GW of wind, solar, and battery storage.

3. Plans to add 2.5 GW of new capacity by 2027, leveraging its $1.5 billion green bond issuance.

4. Inflation Hedge:

5. Over 80% of its PPAs are inflation-indexed, ensuring cash flows keep pace with rising costs.
6. Its 2.8 GW of combustion-based generation acts as a natural hedge against grid volatility.

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Dividend Safety: A 100% Coverage Ratio and Growing Payouts

Clearway’s dividend has grown at a 5-8% annual clip for over a decade, funded by a dividend coverage ratio of 1.2x (dividends / FFO per share). Even in 2023—a year of rising rates—the payout remained secure, supported by:
- $2.3 billion in adjusted cash flow from operations (up 4% YoY in 2024).
- A 9.7% revenue growth forecast for 2025, driven by new projects coming online.

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The Catalyst: Upcoming Earnings and a Bullish Analyst Consensus

Investors should watch April 30, 2025, when Clearway reports Q1 2025 earnings. Analysts project $0.85 EPS, a rebound from a temporary dip in Q4 2024. A strong report could catalyze a 20%+ rebound, pushing shares toward the $35 price target (Deutsche Bank’s $38 estimate implies 28% upside from current levels).

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Risks to Consider

• Interest Rate Sensitivity: Higher rates could pressure valuations in rate-sensitive sectors.
• Regulatory Headwinds: Policy shifts in renewable incentives (e.g., tax credits) could delay projects.
• Competition: Rival utilities like NextEra Energy are also expanding rapidly, though Clearway’s lower valuation offers a margin of safety.

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Conclusion: A Rare Buy Signal in a Volatile Market

At a P/E ratio of 34.9, Clearway isn’t cheap. But when you factor in its 6% yield, $34.71 average price target (from 10 analysts), and 86.59% 5-year total return, the case for long-term holding becomes clear. The stock’s recent 33% pullback has created a rare entry point into a company with:
- Inflation-proof cash flows,
- Low debt risks, and
- Exposure to the $1 trillion clean energy transition.

For income-focused investors with a 5+ year horizon, CWEN.A fits the “buy and hold forever” mold. The dividend is secure, the growth pipeline is firing on all cylinders, and the valuation remains reasonable relative to its peers.

Final Takeaway: Ignore the noise. This is a stock built to thrive through cycles—and reward patient investors with decades of dividends and growth.