Beaten Down Brazil Offers Investment Opportunities

The Bovespa Index is down over 20% YTD. Compared to Chile and Mexico, Brazil’s performance has been worse so far this year. However Brazil continues to be the most attractive investment destination in Latin America for foreign investors. For example, Brazil ranked 5th in Foreign Direct Investment (FDI) with about $48 billion flowing into the country according an UNCTAD report. This is a sharp rise from 2009 when the FDI figure stood at $26 billion.

As the largest Latin American country with a growing middle class and rising income levels, Brazil offers strong potential for growth. Brazil’s dependence on commodity exports will adversely affect the country should global commodity prices plunge. However, contrary to popular belief Brazil is increasingly exporting more manufactured goods than just commodities. So the growing domestic economy should makeup for any shortfall in exports.

With most Brazilian equities beaten down, investors with a long-term horizon of five years or more can consider adding some stocks at current levels.  To get started, the following is a list of ten stocks from different industries with some offering high dividend yields:

1.Company: Braskem SA (BAK)
Current Dividend Yield: 4.60%
Sector:Chemical Manufacturing

2.Company: Cpfl Energia SA (CPL)
Current Dividend Yield: 5.93%
Sector:Electric Utilities

3.Company: Energy Co of Minas Gerais (CIG)
Current Dividend Yield: 5.66%
Sector:Electric Utilities

4.Company: Vale SA (VALE)
Current Dividend Yield: N/A
Sector:Metal Mining

5.Company: Ultrapar Participacoes SA (UGP)
Current Dividend Yield: 3.30%
Sector:Oil & Gas Operations

6.Company: Petroleo Brasileiro SA Petrobras (PBR)
Current Dividend Yield: 4.28%
Sector:Oil & Gas Operations

7.Company: Embraer SA (ERJ)
Current Dividend Yield: 0.72%
Sector: Aerospace & Defense

8.Company: Copel Companhia Paranaense De Energia (ELP)
Current Dividend Yield: 0.84%
Sector:Electric Utilities

9.Company: Companhia de Saneamento Basico do Estado de Sao Paulo – SABESP (SBS)
Current Dividend Yield: N/A
Sector:Water Utilities

10.Company: Companhia Siderurgica Nacional (SID)
Current Dividend Yield: 6.48%
Sector:Misc. Fabricated Products

Disclosure: Long PBR, UGP

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