Thursday, November 17, 2011

Top Yielding Brazil Utility Stocks

Brazil is a very wealthy country, based on its commodity resources, its financial stability, and its people. Speaking of Brazilian people, did you happen to see how wealthy the Brazilian supermodel Gisele Bunchen is and her effect on the companies that she endorses? As a matter of fact, three of the top five wealthiest supermodels in the world, Gisele, Adriana Lima, and Alessandra Ambrosio, are all from Brazil. What is it about Brazil?

Is it because this country, the fifth largest in the world by both area and population, is ranked number seven out of all countries in terms of Gross Domestic Product? Is it because a substantial portion of its energy comes from renewable sources, primarily hydroelectricity and ethanol? Is it due to the huge oil reserves off its coast? Or maybe it is the jump in the literacy rate since 1980 from 75% to 90%? Maybe it is all of the above.

Brazilian utility stocks may be one option for investors looking for growth, income, and stability in terms of Brazilian investments. According to the free list of Brazil stocks at, there are half a dozen Brazilian utilities to choose from.

CPFL Energia S.A. (CPL) is the largest provider of electric generation and distribution in Brazil. It is also Brazil's third largest utility. The company, headquartered in Campinas, Sao Paulo, is composed of CPFL Brasil, CPFL Pirantininga, CPFL Paulista, CPFL Geracao and SEMESA.

The company has an installed generating capacity of over 2,300 megawatts. The consumer group revenues were approximately 31.4 percent from industrial customers, 19.6 percent from commercial customers, 37.3 percent from residential customers and 3.3 percent from rural customers, along with 8.4 percent from other customers.

The company also owns a couple dozen small hydroelectric generation facilities and one thermoelectric power plant. The stock has a forward price to earnings ratio of 10.1 and a hefty yield of 6.4%. Earnings for the latest quarter were up 7.1% on a 6.2% increase in revenues.

Companhia Energetica de Minas Gerais [CEMIG] (CIG) is one of the largest generator and distributor of power in Brazil. Also known as CEMIG, it has over 50 power plants in operation, with a generating capacity of 6,000 megawatts. The company also owns cable television and Internet and telecommunications services. Over half of the stock in CEMIG is owned by Minas Gerais, which his traded on the Bovespa and the New York Stock Exchange.

The power generation of the company is produced through 59 hydroelectric plants, three thermoelectric plants and four wind farms. Eight of the hydroelectric plants account for about 83 percent of the installed electric capacity of the company. The company also has over 30 substations, with around 100 transformers that have a transformation capacity of approximately 15,000 megavolts.

The company transmits both its own energy, and the energy that is purchased from Itaipu. The company has a dozen industrial consumers, who accounted for nearly 20 percent of the total volume of electricity the company sold. electricity to approximately 7.1 million end-consumers. The stock trades at 11.3 times forward earnings and pays a yield of 6.3%. Earnings for the latest quarter ending June 30 were up an outstanding 28.5% on an 11.3% revenue rise.

Companhia Paranaense de Energia [COPEL] (ELP), also known as COPEL, is an electric power company that specializes in the business of transmission, distribution and generation of electric power in Brazil’s Parana state. The company also provides telecommunication and information technology services through services it has developed with various partnerships. The company has over 17 hydroelectric plants and one thermoelectric plant.

The company is made up of five subsidiaries, Copel Geracao, Copel Transmissao, Copel Distribuicao, Copel Telecomunicacacaes and Copel Participacaes. The system relies on 12 substations, several of which are remote-operated. The stock has a forward P/E ratio of 8.7 and a yield of 1%.

To see other high yield Brazilian utilities and other dividend paying Brazil stocks, you can access a free list of Brazil stocks at, which can be downloaded, updated, and sorted.

Disclosure: Author did not own any of the above at the time the article was written.


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