CEMIG Cuts CIG-C Dividend 68.4% to $0.0135

Companhia Energética de Minas Gerais, or CEMIG, cut its quarterly CIG-C dividend 68.4% to $0.0135 per share from $0.0429. The shares go ex-dividend on September 28, 2026. The indicated annual dividend is $0.15 per share.

Why the dividend changed

CEMIG did not present the action as a reset of a fixed quarterly dividend. Its shareholder notice described the underlying distribution as interest on equity, a Brazilian form of shareholder remuneration, and gave no operating reason for a lower recurring rate. The notice covered holders of both common and preferred shares. It did not cite a stock split, merger or spin-off. For CIG-C investors, the 68.4% cut therefore reflects a smaller installment in a variable distribution program, not a company statement that a regular base dividend has been permanently rebased.

The latest results show mixed operating and financial signals rather than a single stress event. In the second quarter, adjusted EBITDA rose 9.3% to R$2.47 billion, helped by distribution, generation and transmission. Net income fell 20.4% to R$945 million as weaker energy-trading results and higher financial expenses outweighed those gains, according to CEMIG’s second-quarter filing.

Capital demands also remained substantial. CEMIG reported first-half capital expenditure of R$3.28 billion, concentrated in regulated businesses, while leverage stood at 2.58 times net debt to adjusted EBITDA. The company said it was extending debt maturities and optimizing liquidity. Those facts help frame the smaller distribution, although management did not explicitly connect them to the amount declared.

Dividend track record

The payment history is variable even though the stated frequency is quarterly. Before the September 28, 2026 payment of $0.0135, CIG-C paid $0.0429 on July 2, 2026, $0.0467 on May 14, 2026 and $0.0432 on March 30, 2026. The latest amount is therefore a clear step down from the recent range, but the sequence has never resembled a fixed, mechanically rising U.S. utility dividend.

Full-year totals reinforce that pattern. Distributions rose 54.5% to $0.21 in 2022, fell 17.5% to $0.17 in 2023, rose 38.4% to $0.24 in 2024 and increased 28.3% to $0.31 in 2025. CEMIG has a 2-year dividend-growth streak, while 2023 was the last annual cut year. The five-year record is 36.0% annual growth, but that average masks pronounced changes in both annual totals and individual installments.

The current annual dividend is $0.15 per share. At that rate, 100 shares generate $15.00 in annual income. The gap between that figure and the $0.31 distributed in 2025 underscores the difference between the latest annual rate and the prior calendar-year total.

Is the dividend covered?

The dividend consumes 79% of earnings. Earnings therefore cover the distribution, but the ratio leaves a narrower cushion than a low-payout utility would have if profit weakens or capital needs rise.

SmarterDividends scores the dividend 57 and rates it C, meaning borderline within the 50-65 band. In plain terms, current earnings support the payout, but the combination of a high earnings payout and an uneven payment record limits confidence in stability. The grade does not imply that another cut is certain. It indicates that coverage deserves monitoring.

Yield and valuation

At a share price of $3.31, CIG-C’s forward yield is 4.42%. That is slightly above the Utilities sector median forward yield of 4.36%, so the cut has not left the shares with a yield materially below the sector benchmark.

SmarterDividends estimates fair value at $7.95 and classifies the shares as undervalued, representing 140% upside to fair value. The shares have recorded a 22.6% gain over one year. The fair-value figure is a model estimate, not a forecast of a future market price, and it does not alter the dividend’s borderline safety assessment.

What to watch

The next operating checkpoint is CEMIG’s third-quarter earnings release, scheduled for November 12, 2026, according to its investor calendar. Investors can track whether trading losses and financial expenses ease, how leverage develops, and whether regulated-business cash generation keeps pace with the capital program. Those items bear directly on the earnings available for shareholder distributions.

Payment size also warrants attention. CEMIG’s dividend history shows that it declares interest on equity in separate installments rather than maintaining a fixed U.S.-style quarterly rate. The next declaration will help distinguish a one-installment drop from a sustained lower run rate. For the current event, September 28, 2026 is the next ex-dividend date.