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Companhia Energetica de Minas Gerais (CIG - Analyst Report), also known as CEMIG, recently announced the approval of its board of directors regarding an extraordinary dividend payment amounting to R$1.7 billion or R$1.35 per share. The company’s American Depository Receipt (ADR) gained 0.12% after the announcement on Jun 27.

CEMIG disclosed that this dividend will be disbursed in two installments to shareholders of record as on Jun 27, 2014. The first installment of approximately R$0.87 per share will be paid by Jul 8, while the second installment of roughly R$0.48 per share will be distributed by Sep 30.

Earlier, on Apr 30, 2014, CEMIG had announced that it will pay a dividend of approximately R$0.89 per share, amounting to R$1,122.5 million to shareholders, in two installments for the year 2013.

CEMIG follows a consistent policy of rewarding its shareholders by paying at least 50% of the previous year profit as dividend. Additionally, as and when the cash position permits, the company is entitled to pay extraordinary dividends with prior approval of its board of directors.

In 2013, the company paid R$4.6 billion of dividend and interest on equity, substantially above disbursements of R$1.748 billion and R$2.036 billion in 2012 and 2011 respectively.

With a sound dividend policy, we find this Brazilian electric utility an attractive investment option for long-term investors. The company’s annual dividend yield for 2014 is anticipated to be 6.5%. Also, CEMIG seems well positioned to reap benefits from the growing electricity demand in the country – an expected annual rise of 5.9% till 2019, according to the Ministry of Mines and Energy's (MME) 10-year plan.

CEMIG has a $10.3 billion market capitalization and currently carries a Zacks Rank #3 (Hold). Some better-ranked companies in the electric utility industry include Black Hills Corporation (BKH - Snapshot Report), Dynegy Inc. (DYN - Snapshot Report) and NRG Energy, Inc. (NRG - Analyst Report). All these stocks sport a Zacks Rank #1 (Strong Buy)

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