High energy prices should continue to favor energy generators and dividend specialist points out the best in the segment: 'it should continue to benefit' (Image: iStock/Leila Melhado)
Due to its stability, predictability of results and strong cash generation, the electricity sector is one of the favorites of investors looking for shares that pay dividends on the stock exchange.
In fact, some companies in the sector stand out for their high distribution of profits and are always in the market's sights. A classic example is the Taesa (TAEE11)common dividend yield greater than 9% in the last 12 months.
However, the sector's greatest opportunity is not in the energy transmission segment, where the giants Taesa and Isa Cteep (TRPL4)but rather electrical generationsays analyst and dividend specialist at Empiricus Ruy Hungary.
He recalls that the generation segment has suffered a lot in recent years due to high levels of rainfall, which overloaded the reservoirs and caused an oversupply of energy. Consequently, the price of energy fell. “This ended up affecting the generators’ results,” said the analyst.
But, in recent months, rainfall levels have been lower than expected, reservoirs are becoming less and less full and energy prices have risen again.
According to the analyst, the prospect is that the price of electricity will continue to rise in the coming months.
“Rainfall is still below expectations and we are beginning to see the possibility of higher temperatures again, which contributes to an increase in energy demand”, highlighted the analyst on the Money Times program Giro do Mercado.
Eletrobras is the analyst's preferred energy generator to seek capital gains and dividends
This scenario has benefited and should continue to favor generators, who are able to sell energy at a better price, and, consequently, generate more cash.
In this segment, the analyst is not on the fence about which stock to choose: the Eletrobras (ELET6).
“It is a company that has benefited from this improved outlook and we understand that it should continue to benefit”, recommends Ruy Virgínia.
In addition to improving results due to the price of energy, the company has also shown operational improvements since privatization through reduced expenses and gains in efficiency.
“At current prices, we see Eletrobras trading at 6 times its firm value over Ebitda (EV/Ebitda) for 2025, the cheapest among its closest peers”, highlighted the analyst.
See 4 other stocks to seek dividends and capital gains
Despite the dividend yield of Eletrobras' last 12 months was lower than Taesa's (approximately 4% versus 9%), the analyst argues that this should not be the only criterion when putting together a good portfolio, even for investors focused on earnings.
“There are countless cases of investors who end up looking only at the yield. They even receive the yield of 10%, for example, but when they look at the share price a year later, it has plummeted by 50%. At the end of the day, you earned a 10% dividend and the stock fell 50%. It’s a very big loss of capital,” said Hungary.
In this sense, the dividend specialist at Empiricus says he looks for companies that combine two fundamental characteristics:
- Good dividend payout; e
- Possibility of capital gain.
To find companies of this type, Hungary highlights that the investor must understand whether the valuation of the company is interesting and whether the business “can offer stability to the point of providing predictability in cash generation over a longer period of time”.
And this is exactly the case of Eletrobras and four other stocks selected by the analyst at the request of the Money Times program Giro do Mercado.
The good news is that you can check out all the stocks handpicked by the analyst in one report available as a courtesy to all interested investors.
To access it is simple, fast e 100% free: just click this link or the button below and wait for the complete report to be sent to your email. Good investments!