Clearway Energy (NYSE:CWEN) (NYSE:CWEN.A) has been largely immune to the impact the COVID-19 outbreak has had on electricity usage.

That's because the company's business model of selling the power it produces under long-term, fixed-rate agreements insulates it from near-term volatility in demand and pricing. This resiliency was on full display during the first quarter.

A look at Clearway Energy's first-quarter earnings

Metric

Q1 2020

Q1 2019

Change

Adjusted EBITDA

$225 million

$191 million

17.8%

Cash from operating activities

$84 million

$61 million

37.7%

Cash available for distribution (CAFD)

$8 million

($13 million)

N/M

Data source: Clearway Energy.

Clearway Energy's earnings and cash flow soared during the first quarter, due to healthy growth across all three of its power groups:

Clearway Energy's earnings by segment in the first quarters of 2020 and 2019

Data source: Clearway Energy. Chart by author.

Earnings from conventional power plants soared 30%, fueled mainly by the recent acquisition of the Carlsbad Energy Center. That helped offset flat year-over-year availability at 89% of its capacity.

Renewable energy earnings, meanwhile, jumped nearly 15%. Powering that surge was a 16% increase in electricity generation thanks to more favorable year-over-year wind and solar conditions across its portfolio.

Finally, thermal earnings rose by about 6%, thanks to the solid performance of those assets.

Several wind turbines in a field with a bright sun in the background

Image source: Getty Images.

A look at what's ahead for Clearway Energy

Clearway Energy's solid first quarter has it on track to deliver on its full-year forecast. That outlook would see it generate $310 million, or $1.56 per share, of CAFD in 2020, which would be 22% above last year's level.

Meanwhile, the company has several growth initiatives underway to boost that number over the coming year. The largest driver is the expectation that it will invest $241 million into three wind projects. The company expects to close two of these transactions by year-end, and the third in 2021. It anticipates that they'll supply $23 million of incremental CAFD. After adjusting for financing costs and other growth initiatives, the company sees its pro forma CAFD rising to $340 million, or $1.70 per share.

Clearway also anticipates that the bankruptcy of one of its largest customers, California electric utility PG&E (NYSE:PCG), will come to a resolution this summer. While PG&E has continued to honor its contracts, Clearway's lenders have restricted its ability to access that money until the utility exits bankruptcy. Once that happens, Clearway expects to use the currently restricted cash of $148 million to help finance its wind power transactions. Meanwhile, it anticipates using some of the future cash flow produced by its contracts with PG&E to support a higher dividend, which it expects to normalize following that company's exit of bankruptcy.

Clearway should have plenty of power to continue increasing its dividend in the coming years, given the visible growth from its upcoming wind transactions and its pipeline of acquisition and investment opportunities. The company currently has the right of first offer on several projects that will start up through 2022, including utility-scale solar projects in Hawaii and Mississippi, a utility wind project in West Virginia, a wind repowering project in Texas, and several distributed solar projects.

Meanwhile, its parent continues to advance new projects, which, when combined with potential third-party investment and acquisition opportunities, provide it with a long growth runway. With lots of liquidity and leverage metrics within its target, Clearway has ample financial flexibility to pursue additional opportunities to grow its portfolio, cash flow, and dividend.

An ideal option for investors seeking dividend growth powered by clean energy

Clearway Energy's business model has proved immune to the current pandemic, so the company will have no problem supporting its dividend, which currently yields 4%. Meanwhile, that payout appears likely to rise in the coming year, getting a boost from PG&E's eventual emergence from bankruptcy and its upcoming wind-power transactions. Those factors make it an excellent option for investors seeking a growing dividend powered by clean energy.