4 High-Yield Emerging-Market Stocks

2. Companhia Energetica de Minas Gerais (CIG)

Yield: 6%

Brazil is one of the few countries in the world that is self-sufficient in oil, a leader in alternative energy and a major producer of commodities such as iron ore. The country offers particularly attractive investments in its commodities and infrastructure sectors.

Companhia Energetica de Minas Gerais (CEMIG) is one of Brazil's largest integrated electric utilities, with more than 6,896 megawatts of installed generation capacity. The company gets about 97% of its electricity from hydroelectric power. CEMIG is well-positioned to benefit from Brazil's increasing demand for electricity -- sales improved 9.0% in 2010 to 66,255 gigawatt-hours as a result of higher demand across all consumer categories.

CEMIG recently announced plans to participate in the construction of a gas pipeline connecting Sao Paulo and Uberaba. The pipeline will primarily serve an ammonia plant being built by Petrobras (PBR), the Brazilian oil giant. CEMIG distributes natural gas through a subsidiary, which serves the majority of Minas Gerais state.

CEMIG reported encouraging 2010 results with net income improving 6% year-over-year to $1.3 billion and 1.6% growth in total installed capacity. Cash flow improved 35% year-over-year to $2 billion and capital spending rose 15% to $1.5 billion. Management plans to spend about $1.3 billion on facility expansion and upgrades in 2011.

CEMIG has $1.8 billion in cash and pays a $1.10 dividend, which currently yields 5.7%. Debt is modest at about one-third of equity, and shares are affordable, trading at only 8.8 times projected 2011 earnings.

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