The recommended portfolios determined by the CNN Brasil Business highlighted that the loosening of China’s zero-Covid policies could boost the price of raw materials, especially iron ore and oil, which affects companies’ profits.
Jennie Li, equity strategist at XP, said companies that deal in commodities are paying good dividends and are projected to pay higher values in the future.
The payment of dividends depends on the numbers of each company and, therefore, is linked to macroeconomic, sectorial and individual issues of each company, due to influences on corporate performance. It can be paid monthly, quarterly or semi-annually.
In any case, the stock strategist at XP says it is important to be aware of a company’s payment history, to see if the company is able to pay good dividends on a recurring basis – or if it happened at a specific time.
Pedro Serra, head of research at Ativa Investimentos, stated that it is “always important to seek sectoral diversification to reduce portfolio risks”.
Inflation has also been taken into account by analysts. Like electric companies, Jennie cites, because companies in the sector have rate-adjusted contracts, “so they are more resilient and protected in a scenario of rising costs.”
Since January, the official inflation indicator, the IPCA, measured by the Brazilian Institute of Geography and Statistics (IBGE) has already registered an accumulated increase of 4.78%.
To create this month’s dividend portfolio, the CNN Brasil Business gathered recommendations from eight banks and brokers: Planner, Santander, Ativa, Guide, XP, NuInvest, Órama and Terra.
Similar to the portfolio recommended for June, Banco do Brasil, Petrobras and Engie followed as the most indicated companies for the month. And who shared the second place with the energy distributor – with four recommendations – was Vale.
See what experts commented on the most suitable companies:
The company continues to show good production volumes and a reduction in its lifting cost (extraction cost), with a greater share of pre-salt operations in the portfolio. We expect the start-up of new wells in the medium term, contributing to the increase in production.
In the 1st quarter, net revenue totaled R$ 141.6 billion, growth of 5.6% in the quarterly comparison. The company justifies the growth by the 27% rise in the price of brent, the higher volume of oil sales in the market due to the sale of the Mataripe Refinery (RLAM) and the higher volume of oil exports.
Bank of Brazil
Comment: Land Investments
We believe that Banco do Brasil has been showing strong credit growth (especially in rural credit and in some segments for individuals) and good portfolio quality and is ready to present strong numbers in 2022, placing the institution at a large discount compared to its peers, and ensuring an interesting return in terms of dividends for the shareholder.
Currently, BB is traded at 5 times Price/Earnings (P/E) against the average of Brazilian peers of nine times. This is a metric used to understand how cheap or expensive a stock is.
In June, although Engie surpassed the Ibovespa index, the shares performed negatively. We do not see relevant news and we attribute the result to market conditions.
We continue to believe that Engie’s dividend distribution will be maintained in 2022 at the level of distribution of 100% of profits, in view of the company’s comfortable liquidity situation.
We estimate an average dividend yield of 9.7% in 2022.
It is worth noting that under Engie’s bylaws, it is mandatory to distribute dividends to shareholders that are not less than 30% of the company’s net income, in accordance with the terms of corporate law.
However, the company goes further, having practiced an indicative policy of minimum payment of 55% of adjusted net income.
We expect the demand for high quality iron ore to continue in the short term, benefiting the company due to the increase in the S11D project (located in the municipality of Canaã dos Carajás, in the southeast of Pará), which increased the supply of the higher quality commodity in company.
At the same time, Vale’s board of directors approved a new share buyback program (limited to 500 million shares or almost 10% of total outstanding assets, with a duration of 18 months), which reinforces the focus on remuneration to shareholders and, in our view, may lead to a positive market reaction to Vale’s shares.
Source: CNN Brasil