Petróleo Brasileiro S.A. - Petrobras

What does it do?

Petrobras is Brazil's national oil company — think of it as the country's energy backbone. It drills for oil and gas deep under the ocean floor off Brazil's coast, refines that crude into fuels like gasoline and diesel, and sells energy products across Brazil and globally. It's one of the biggest oil producers in the world, pumping around 2.7 million barrels of oil per day. If you've ever filled a car with gas in Brazil, there's a good chance Petrobras touched that fuel at some point.

How does it make money?

Petrobras makes most of its money by pulling oil and gas out of the ground and selling it — its Exploration and Production segment is the profit engine. It also refines crude oil into fuels and petrochemicals through its Refining, Transportation & Marketing arm, selling to domestic and international markets. The company brought in $470.9 billion in revenue in its latest annual report, down from $527.9 billion the prior year, but still posted a massive $103.7 billion in net income — meaning it kept roughly 22 cents of profit for every dollar of revenue. It also pays hefty dividends, which is a major reason income-seeking investors own the stock.

Why do investors care?

The core appeal is simple: Petrobras produces oil cheaply and returns a lot of that cash to shareholders through dividends — the annual dividend yield has regularly exceeded 10%, which is extraordinary compared to most stocks. Its pre-salt oil fields have some of the lowest break-even costs in the world, meaning Petrobras stays profitable even when oil prices fall. For the thesis to work, oil prices need to stay reasonably firm, Brazil's government needs to stay hands-off on pricing and strategy, and the company needs to keep delivering on its ambitious production growth targets through 2030.