Will the additional generation lead to any changes in the company's dividend policy?

Answer

The extra 13,000 GWh of output in H1 2025 strengthens Avangrid’s (AVP) near‑term cash‑flow outlook, but it does not, by itself, guarantee a shift in the dividend policy. The company’s dividend‑setting framework still hinges on three pillars: sustainable earnings, free‑cash‑flow generation after accounting for the heavy‑cap‑ex cycle, and the need to preserve a solid balance sheet for future growth projects.

From a fundamental standpoint, the higher generation translates into higher revenue and, assuming stable power‑price spreads, a modest uplift in operating profit. However, Avangrid is simultaneously expanding its portfolio, which means a sizable portion of that incremental cash will be reinvested in new assets (wind, solar, storage) rather than paid out to shareholders. Historically, Iberdrola‑group peers have kept dividend yields in the 3‑4 % range, only nudging them upward when free‑cash‑flow reaches a comfortable surplus after cap‑ex. Until the company signals that the new generation has fully covered its capital‑budget needs and produced excess cash, the dividend is likely to stay on its current trajectory.

From a technical and market‑dynamic view, AVP’s stock has been trading in a tight range around the 30‑day moving average, with the recent news already priced in. There is little upside in the short term unless the management issues a dividend‑policy update (e.g., a “special dividend” or a modest increase in the regular payout). Until such guidance is released, the prudent trade‑bias is to hold for investors who value the stable, mid‑single‑digit yield, while avoiding speculative long‑positions that bet on a sudden dividend hike. If earnings guidance later shows a clear free‑cash‑flow surplus, a modest upgrade to the dividend could be priced in, offering a potential upside of 2‑3 % on the stock. Until then, the dividend policy is expected to remain unchanged.