CEMIG Extraordinary Dividend's 2nd Half Due, Gains 1.6%

Companhia Energetica de Minas Gerais (CIG), also known as CEMIG, announced that it will pay the second installment of its previously approved extraordinary dividend on Sep 30. The news lifted the company’s American Depository Receipt (:ADR) price by 1.6%. The ADR closed the trading session at $6.52 on Sep 23.

The second installment of the extraordinary dividend payment, amounting to R$604 million or R$0.48 per share, will be paid to all shareholders of record as on Jun 27, 2014.

The special dividend of R$1.7 billion or R$1.35 per share was approved by CEMIG’s board of directors in Jun 2014. A month later, the company paid the first installment of R$1.1 billion or R$0.87 per share to shareholders of record as on Jun 27.

CEMIG follows a consistent policy of rewarding its shareholders by paying at least 50% of the previous year’s profit as dividends. Additionally, as and when the cash position permits, the company is entitled to pay extraordinary dividends with prior approval of its board.

Ordinary dividend for 2013, amounting to R$1,122.5 million or R$0.892052774 per share, was approved in Apr 2014. The first installment was paid in June while the second will be disbursed in December.

With a sound dividend policy, we find this Brazilian electric utility an attractive option for long-term investors. CEMIG’s annual dividend yield for 2014 is anticipated at 8.3%. Also, the company appears well-positioned to reap benefits from the growing electricity demand in Brazil.

With a market capitalization of $8.2 billion, CEMIG currently carries a Zacks Rank #4 (Sell). Some better-ranked companies in the electric utility industry include Black Hills Corporation (BKH), Huaneng Power International, Inc. (HNP) and NRG Yield, Inc. (NYLD). All these stocks sport a Zacks Rank #1 (Strong Buy).

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