Ágora's August Picks: Copasa Leads Brazilian Dividend Portfolio Targeting 13% Returns

The Quick Take

• Ágora recommends 5 Brazilian dividend stocks projecting up to 13% returns for August
• Copasa (CSMG3) replaces Copel; Sabesp (SBSP3) replaces Gerdau in updated portfolios
• Regulated utility assets preferred over cyclical steel stocks in high-Selic environment

Brazilian brokerage Ágora has released its August portfolio recommendations, projecting dividend returns of up to 13% from five selected stocks for income-focused investors. The most notable change is the substitution of Copel (CPLE3) shares with Copasa (CSMG3), reflecting a view that the Minas Gerais water and sanitation utility offers superior yield consistency and regulatory tariff protection compared to the Paraná electricity utility. Copasa's stable cash flow profile from regulated concession contracts underpins the 13% yield projection in the current interest rate environment.

In its growth-oriented portfolio, Ágora replaced Gerdau (GGBR4) with Sabesp (SBSP3), the São Paulo water utility that has undergone partial privatization. The Sabesp substitution reflects the view that infrastructure utilities with regulatory tariff reset mechanisms offer better risk-adjusted returns than cyclical steel producers. Gerdau's earnings are sensitive to global steel prices and Chinese demand slowdown concerns, while Sabesp's regulated tariff structure provides earnings predictability following its privatization. The bank recommends 10 growth stocks to beat the Ibovespa.

Ágora's August recommendations reflect a broader Brazilian investor preference for regulated utility assets over cyclical industrial stocks as elevated Selic rates create pressure on high-debt corporate balance sheets. With Brazilian benchmark Selic rates remaining high, dividend yield compression from rate normalization has not fully materialized, creating an attractive entry point for equity income investors. The projection of up to 13% dividend yield targets stocks where regulatory tariff structures and concession cash flows provide dividend visibility over a one-to-two-year horizon.

Synthesized from 2 sources.