Companhia Energética de Minas Gerais SA : CIG-US: Dividend Analysis : May 17th, 2017 (record date) : By the numbers : August 16, 2017

Our analysis is based on comparing Companhia Energética de Minas Gerais SA with the following peers – Centrais Eletricas Brasileiras S.A. – Eletrobras Sponsored ADR Pfd Class B, Companhia Paranaense de Energia Sponsored ADR Pfd Class B, CPFL Energia S.A. Sponsored ADR, FirstEnergy Corp., Consolidated Edison, Inc., Power Assets Holdings Limited Sponsored ADR, SSE plc Sponsored ADR, EDP-Energias de Portugal SA Sponsored ADR, Companhia Siderurgica Nacional Sponsored ADR and Vale S.A. Sponsored ADR (EBR.B-US, ELP-US, CPL-US, FE-US, ED-US, HGKGY-US, SSEZY-US, EDPFY-US, SID-US and VALE-US).

Companhia Energética de Minas Gerais SA’s dividend yield is 2.19 percent and its dividend payout is 93.32 percent. This compares to a peer average dividend yield of 4.11 percent and a payout level of 52.78 percent. This combination of a relatively lower dividend yield and a higher payout ratio suggest that the dividend payout might not be sustainable. Supporting this is the company’s average dividend quality score of 58 out of a possible score of 100, which points to some weakness in being able to sustain the higher payout ratio.

Dividend Yield
Dividend Quality Score

Dividend Quality Overview

  • Over the last twelve months (prior to March 31, 2017), CIG-US paid a low quality dividend, which represents a yield of 6.05% at the current price.
  • Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 2 were high quality, 1 was medium quality and 2 were low quality.
  • The ending cash balance, with a dividend coverage of 3.39x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
Dividend Quality Score Vs Dividend Yield

Quadrant label definitions. Hover to know more

High Score;High Yield, High Score;Low Yield, Low Score;Low Yield, Low Score;High Yield

Dividend Coverage

Over the last twelve months (prior to March 31, 2017), CIG-US paid a low quality dividend.

The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 1.90x), investing cash flow (coverage of -0.56x), issuance cash flow (coverage of -0.87x) and twelve-month prior cash (coverage of 2.93x), for a total dividend coverage of 4.39x.

CIG-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -0.87x).

Dividend Coverage by Cash Flow (TTM)

These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality.

Dividend History

Item 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31 Latest
Dividend Yield (%) 17.17 42.54 39.99 18.97 10.32 2.19
Dividend Payout (%) 45.92 46.81 40.39 23.54 193.97 93.32

A complete list of metrics and analysis is available on the company page.

Company Profile

Companhia Energética de Minas Gerais SA engages in the generation, transmission, distribution and sale of electricity, gas distribution, telecommunications and the provision of energy solutions. It operates through the following segments: Generation, Transmission, Distribution, and Other Businesses. The Generation segment engages in the generation of electricity through hydroelectric plants, thermoelectric plants and wind farms. The Transmission segment engages in the electric power transmission business, which consists of transporting electric power from the facilities where it broadcasted to the distribution networks for delivery to final users. The Distribution segment engages in the supply electricity to consumers in the state of Minas Gerais. The Other Businesses segment engages in the telecommunications, national and international energy solutions, and exploitation of natural gas. The company was founded by Juscelino Kubitschek de Oliveira on May 22, 1952 and is headquartered in Belo Horizonte, Brazil.

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