I thought CPL looks/sounds interesting-any comments appreciated.
Five Overseas Dividend Stocks With Strong Yields:
smartmoney.com
As Brazil enters a fourth year of economic growth, the country's expanding middle class is on a spending spree, buying computers, appliances and other gear that sucks up energy. Cashing in on the boom is Brazilian electric utility CPFL Energia, which serves São Paulo. As CPFL races to meet electricity demand, the utility looks a lot like a growth stock — one that just happens to pay a fat dividend. "You don't find many places in the world where you get that plus a potential 20% growth story," says Edward Guinness, comanager of the Guinness Atkinson Alternative Energy fund, which invests in power companies around the world, including CPFL.
Higher electricity prices are fueling some of CPFL's growth, and its bottom line is getting a boost from two years of interest-rate cuts by Brazil's central bank, which lowers payments on the company's debt. The company has also generated profit from consolidating smaller electricity distributors in São Paulo and making them more efficient. And as the government recognizes the need for investment in Brazil's power infrastructure, it has allowed utilities to keep some of the rewards of lower costs and lower interest rates, enabling them to boost their returns.
CPFL has pledged to pay out 50% of its earnings in the form of dividends, and it has been doing much better than that lately — returning a hefty 95% of its profit to shareholders in 2006. But fair warning: A spokesperson says CPFL has its eye on two Brazilian utilities. And if the company makes a big acquisition, Bear Stearns Latin American utility analyst Rowe Michels thinks CPFL might have to trim the dividend to help pay for it, though he still expects a generous 75% payout ratio. Call it the price of growth. |
