NEW YORK, NY--(Marketwire - Feb 21, 2013) - Foreign utility stocks can be an attractive addition to a portfolio. These stocks may not only provide good capital return and robust dividend yield, but also add diversification to a portfolio. Utility stocks in general have inelastic demand and thus are more immune to the vagaries of the general economy. Foreign utility stocks in particular are affected by their domestic economic factors, thus providing a good hedge. Companhia de Saneamento Basico do Estado de Sao Paulo (NYSE: SBS) is based out of Brazil and offers good double-digit annual return. Enersis S.A. (NYSE: ENI) is operational in five countries and a good candidate to benefit from cross-border economies.
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Enersis S.A. recently reported its fourth quarter results. The company reported a decline in its EBITDA due to rise in its input costs. However, the company is taking steps to increase its margins and contain its costs by increasing efficiency. Enersis S.A. also experienced increase in its demand. This increase is expected to continue with the escalation in development activities in the company's area of operation.
Enersis is expanding in international markets. The outlook is good for all countries in which it currently operates in as the company expects demand to pick up in all these markets. While this would improve top-line figures for the company, Enersis also endeavors to boost its margins to improve profitability. The stock dropped 1 percent in the past 12 months, but it is on its way to recovery. It gained 6 percent on a YTD basis. Enersis also offers a robust dividend yield of 2.85 percent, which is an enticing rate for the investors looking for solid regular income. The company is expected to push its stock price up with its plans to increase efficiency. Enersis is a well-diversified company and has good cushion against the sector-related risks.
Elsewhere, Companhia de Saneamento Basico do Estado de Sao Paulo stock is up 15 percent this year so far and in the past 12 months, it tallied 28 percent growth. The company also offers 2.5 percent dividend growth. Robust capital growth and healthy dividend yield makes this stock worth being included in any value oriented income stock.
Companhia de Saneamento Basico do Estado de Sao Paulo is engaged in providing environmental and basic sanitation services. It is based out of Brazil and is mainly operational in the State of Sao Paulo. The stock can provide hedge against turmoil in domestic market as its main interest lies in a foreign market. It has a track record of robust sales growth trend. However, lately it has been hit by a spike in its costs.
Nonetheless, these maintenance costs are expected to have long-term positive impact as they will help in increasing efficiency of operations. The company reported increase in its sales volumes for the third quarter of the year. It is expected to maintain this trend. The company also increased its revenue as it raised billing rate. The stock is expected to provide good returns on the basis of these healthy numbers.
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