CPFL: the company behind the power bill, renewed for 30 more years

CPFE3CPFL Energia

Electric utilityFormula: Luiz Barsi · Price R$ 43.61 (Friday close)

CPFL runs the wires that bring power to homes and businesses, and in May secured 30 more years on three concessions. R$ 100 of its stock paid R$ 8.10 in dividends in the last 12 months.

The thesis

Delivering electricity is supposed to be a dull, low-return business. CPFL's is not: for every R$ 100 of shareholders' money it earned about R$ 28.50 a year over five years, never less than R$ 24.40, and it paid out 7.5% a year in dividends on average. Barsi's 6% rule puts the ceiling at R$ 54.21; the stock closed Friday at R$ 43.61, 19.6% below it. With three concessions renewed for 30 years, the wires stay CPFL's for a long time. What worries the market is customers leaving, not whether the returns are real.

What the company does

CPFL Energia, based in Campinas (São Paulo), is one of Brazil's largest private electricity groups. Its core is distribution, the local networks that deliver power and bill the customer, alongside generation, including renewables, and transmission since it won CEEE-T in a 2021 auction. China's state-owned State Grid has controlled it since January 2017 and holds about 83.7%. It plans more than R$ 25 billion of investment to grow the asset base its concessions earn on.

Discount to ceiling19.6%Price R$ 43.61 vs ceiling R$ 54.21: room before the formula calls it too expensive

5-yr avg dividend yield7.5%About R$ 7.50 a year in cash per R$ 100 invested, on average

ROE, last 12 months26.4%R$ 26.40 of profit a year per R$ 100 of shareholders' money

P/E8.4The price equals about 8.4 years of current profit

Why the formula picked it

Electricity is the E in BESST. CPFL made a profit and paid dividends in each of the last five years, with ROE of 26.4% and a 71.8% payout, inside the 30-80% band. Five companies passed. Taesa and Cemig had deeper discounts, 33.2% and 25.9%, but both were picked in the last four weeks, so CPFL, third, takes the slot.

Bear case

Customers are leaving the regulated market: in the first quarter of 2026 the volume billed to CPFL's captive customers fell 7.8%, largely as they moved to the free market, and management named unpaid bills and irregular rooftop solar as 2026 challenges. Net debt is about 1.15 times equity and 4.35 times a year of profit. At 2.21 times book value, CPFL is the priciest of this week's four. With State Grid holding about 83.7%, minority shareholders have little say.

What would break the story

ROE under 12%, payout outside 30-80%, a year without profit or dividends, or a price above R$ 54.21 ends it. Outside the formula: customers leaving for the free market fast enough to shrink profit, or a controller decision that cuts the dividend.

Since the screen picked it

Start: November 6, 2026 · R$ 43.61

	CPFE3	Ibovespa	Difference
So far	First update on the next Saturday
3 months	On February 6, 2027
6 months	On May 6, 2027
9 months	On August 6, 2027
12 months	On November 6, 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$ 43.61

Ceiling priceR$ 54.21

Discount to ceiling19.6%

5-yr avg dividend yield7.5%

Dividend yield, last 12 months8.1%

5-yr avg payout71.8%

ROE, last 12 months26.4%

P/E8.4

P/B2.21

Also passed: TAEE11, CMIG4, BBSE3

Sources for the company facts

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

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