By Brazil Stock Guide – Only four of the 347 stocks listed on Brazil’s B3 exchange with sufficient trading history and liquidity outperformed the CDI in each of the five 12-month periods ending July 27 from 2022 through 2026, according to a study by research firm Elos Ayta.
Sabesp (B3: SBSP3), Copel (B3: CPLE3), Cemig (B3: CMIG4) and TIM (B3: TIMS3) were the only stocks to beat Brazil’s main fixed-income benchmark in every period analyzed.
Sabesp delivered the strongest cumulative performance over the five years, gaining 375.06%. It was followed by Copel, up 297.23%; Cemig, up 186.16%; and TIM, up 162.86%. Over the same period, the CDI returned 78.64%, while the Ibovespa, Brazil’s benchmark stock index, gained 40.70%.
The results illustrate the challenge facing Brazilian equities during a period of elevated interest rates. The Ibovespa itself outperformed the CDI in only two of the five annual windows: those ending in July 2023 and July 2026.
In the period ending in July 2022, for example, the Ibovespa fell 18.60%, while the CDI returned 9.37%. Stocks also lagged fixed income in the annual windows ending in 2024 and 2025. In the latter, the Ibovespa gained 4.73%, compared with a 12.44% return for the CDI.
The four winners operate in sectors associated with recurring cash generation and relatively predictable demand. Yet the defensive nature of their businesses explains only part of their performance. Each company also underwent changes that reshaped market expectations for efficiency, earnings and shareholder returns.
Sabesp and Copel provide the clearest examples. The São Paulo water and sanitation company was privatized in July 2024, following a rally that had already begun to price in the transaction. A year earlier, the state of Paraná transformed Copel into a company with dispersed ownership and no controlling shareholder. In both cases, investors began pricing in less political interference, lower costs and greater discipline in capital allocation.
Cemig remained controlled by the state of Minas Gerais but made progress on an operational turnaround built around the sale of noncore assets, improved collections and energy-loss control, increased investment in its distribution network and dividend payments. Recurring speculation about a potential privatization also helped sustain investor interest, although the process never advanced as it did at Sabesp and Copel.
Outside the utilities sector, TIM benefited from the consolidation of Brazil’s mobile telecommunications market. Its acquisition of part of Oi’s mobile assets, completed in 2022, added customers, spectrum and infrastructure while helping reduce the number of major nationwide operators from four to three. Integration synergies, the elimination of overlapping infrastructure and stronger cash generation increased TIM’s capacity to return capital to shareholders.
The performance therefore reflected a combination of predictable businesses and company-specific value-creation events. Sabesp and Copel were rerated as their privatizations progressed and after the transactions were completed. Cemig benefited from its operational recovery and capital discipline, while TIM gained from consolidation in the telecommunications industry.
The study measured share-price appreciation only, excluding dividends and other distributions. Because all four companies paid dividends during the period, the total returns received by shareholders would have been higher than the figures presented in the study.
The comparison with the Ibovespa requires an additional caveat. The index is calculated on a total-return basis, incorporating the reinvestment of distributions paid by its constituent companies. The individual stock returns calculated by Elos Ayta, by contrast, reflect price appreciation alone.
Past performance, however, does not guarantee that Sabesp, Copel, Cemig and TIM will continue to outperform the CDI in future periods.
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