CPFL Energia S.A. (CPL)
CPFL Energia S.A. (CPL) generates and distributes electricity in Brazil, the largest economy in South America. CPFL Energia has an installed capacity of about 1,275 megawatts. Better still, most of that capacity is based on hydroelectric power. While energy costs are reasonable at the moment, it seems reasonable to conclude that the current situation will change when the world economy improves. At that point, a hydroelectric generator gains a huge advantage.
At that time we can also expect demand for Brazil’s many commodities to improve, strengthening demand for electricity. Naturally exchange rates could play a part in determining total returns, but I would bet that will be more of a benefit than a problem in the mid to long-term. With the way they’re cranking out treasuries lately, can the dollar NOT be introuble long-term?
Even if the currency issue has no impact, CPL currently has a dividend of over 12%. In fact, the only two problems I see with CPFL Energia S.A. is that the dividend may be too high, and everything I read about it is positive. Am looking at this too hard, or is CPL as good as I think it is?