XP resumes coverage of stock expected to increase dividends in coming years – Money Times

Allocate dividends
Alupar is the largest 100% private company in the field of energy transmission. (Image: Alupar/Disclosure)

THE XP Investimentos resumed coverage of Alupar (ALUP11) with a buy recommendation for the company’s shares. The new target price of the shares is R$ 29, an upside potential of 13%.

For XP, the company has a stable cash flow and is protected from inflation, which allows the company to trade with real rates of return (IRR) above its peers, Taesa (TAEE11) and ISA Cteep (TRPL4), of 10.5%.

The company also has “a promising improvement in dividend yield for the coming years, after the end of the recent cycle of capex intensive company”, explain Herbert Suede and Maíra Maldonado, analysts who signed the report.

Impact on dividends

In 2016 and 2017, Alupar acquired eight lots in auctions, which exceeded R$ 5.7 billion in necessary investments, a period marked by low distribution of dividends in relation to their peers.

However, XP experts calculate that comfortable leverage and reduced capital requirements for the development of new lines of the company seem to favor an increase in dividend distribution in the coming years.

Alupar is the largest 100% private company in the power transmission in Brazil and, despite facing restrictions in the distribution of dividends in the recent past, it is “notoriously a competent developer of greenfield“, argue the experts.

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O Money Times publishes informative articles of a journalistic nature. This publication does not constitute an investment recommendation.

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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