Cemig: 8.9% a year in dividends, priced at book value

CMIG4Cemig

Electric utilityFormula: Décio Bazin · Price R$ 10.07 (Friday close)

At today's price, R$ 100 of Cemig stock paid R$ 12.50 in dividends over the last twelve months. Profit has grown 11.3% a year, and the shares trade near book value, 32.9% below Bazin's ceiling.

The thesis

Cheap, paying and growing rarely show up together. Cemig has all three: dividends averaging 8.9% a year over five years, a price at about book value (P/B 0.99) and a P/E of 6.3, and profit growing about 11.3% a year. At R$ 10.07 it sits 32.9% below the R$ 15.00 ceiling of Bazin's 6% rule. The discount is about politics, not the power business.

What the company does

Cemig is the electricity company of Minas Gerais: mostly hydro plants, transmission, the state's main distribution network, and gas through Gasmig. Most new investment goes to distribution. The state government controls it, and Cemig is also the largest shareholder of Taesa, this week's Barsi pick.

Discount to ceiling32.9%Price R$ 10.07 vs ceiling R$ 15.00: room before the formula calls it too expensive

5-yr avg dividend yield8.9%About R$ 8.90 a year in cash per R$ 100 invested, on average

Dividend yield, last 12 months12.5%Close to the 5-year average

Net debt / EBITDA2.0xModerate debt for the cash it generates

Why the formula picked it

Dividends in each of five years, a 52.4% payout (under the 75% cap), net debt about 2.0× EBITDA (under 2.5) and ROE of 15.7%. Six companies passed and Cemig had the biggest discount. It also ranked second for Barsi and first for Lynch, which is why Lynch's pick this week is a different company.

Bear case

The controller is the risk. Minas Gerais has been negotiating to hand its stake to the federal government to cut state debt, and the federal deadline for that runs to the end of 2026; a new owner could set a different dividend policy. The last 12 months yielded 12.5%, well above the five-year average, so treat that as a high point, not a run rate. Heavy investment in the grid also competes with dividends for cash.

What would break the story

The 5-year average yield falling under 6%, payout above 75%, net debt reaching 2.5× EBITDA, or the price rising above R$ 15.00. Outside the formula: a change of control that rewrites the dividend policy.

Since the screen picked it

Start: October 30, 2026 · R$ 10.07

	CMIG4	Ibovespa	Difference
So far	First update on the next Saturday
3 months	On January 30, 2027
6 months	On April 30, 2027
9 months	On July 30, 2027
12 months	On October 30, 2027

Price change only: dividends are not included, in the stocks or in the benchmark. The Ibovespa is measured through BOVA11, the ETF that tracks it. Prices: B3 end of day. Updated every Saturday. Past results do not predict future ones.

All the numbers

PriceR$ 10.07

Ceiling priceR$ 15.00

Discount to ceiling32.9%

5-yr avg dividend yield8.9%

Dividend yield, last 12 months12.5%

5-yr avg payout52.4%

Net debt / EBITDA2.0x

ROE, last 12 months15.7%

P/E6.3

Also passed: CPFE3, POMO4, LREN3

Sources for the company facts

Financial numbers: B3 closing prices (Friday) and CVM filings, computed by our screen.

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