The Company in a Nutshell
- The company generates over 90% of its earnings from regulated sources.
- EMA sees strong growth potential in the U.S. (through TECO energy).
- An investment in EMA is an investment in a relatively high dividend yielding stock on the Canadian market.
- Download PDF format (Last reviewed: Dec 9th 2019)
|PRO Rating||4||Dividend Yield||4.56%|
|Dividend Safety||3||Dividend Growth Since||2007|
|DDM Valuation||6.35%||Dividend Frequency||Quarterly|
Emera is an energy and service company. Emera’s main market is Nova Scotia as it owns Nova Scotia Power, the province’s main electricity provider. Emera owns power plants and distributes natural gas in Canada, the USA and the Caribbean. This utility employs over 7,000 workers and serves more than 2.5 million customers. Tampa Electric (41%), NSPI (14%) and Maritime Link (11%) generates most of EMA’s earnings.
|General Information||GE Data|
|Expected Earnings Date||2020-05-08|
|Next ex-dvd date||N/A|
Emera is a very interesting utility with a solid core business established on both sides of the border. EMA now shows $30 billion in assets and will generate revenues of about $6.3 billion. It is well established in Nova Scotia, Florida and four Caribbean countries. This utility counts on several “green projects” with hydroelectricity and solar plants. Through 2020, EMA intends to invest over $6B in new projects. This decreases the risk of future regulations affecting its business as the world is slowly moving toward greener energy.
|5-Yr Rev. Growth:||15.77%|
|5-Yr EPS Growth:||-0.43%|
|5-Yr Div Growth:||10.00%|
The biggest risk that could face Emera is a rapid rise in interest rates. Fortunately, this should not happen in the upcoming months! As it has pursued a growth-by-acquisitions strategy, and it has used more debts to finance the Maritime Link, higher interest rates would slow down Emera’s appetite for growth projects in the future. Management recently reduced their dividend growth target from 8% to 4-5% through 2021. This may be a sign of interest weight on their cash flow.
|Financial Debt to EBITDA (TTM)||6.88|
|Current Ratio (Quarterly)||0.6|
|Free Cash Flow (Quarterly)($B)||-0.633|
Dividend Growth Perspective
Emera has been increasing its dividend payment each year for over a decade now. With the purchase of TECO energy, management intends to continue its tradition. The company forecasts a 4-5% dividend growth rate throughout 2021 while targeting a payout ratio of 70-75% (Emera Investors Presentation). At 4%+ dividend yield, this is a keeper for several years. Don’t get fooled by the high payout ratio; adjusted earnings show a payout ratio around 80% including the recent dividend growth.
|Payout Ratio (%)||59.75%|
|Cash Payout Ratio (%)||-37.24%|
|Enter Expected Dividend Growth Rate Years 1-10:||4.00%|
|Enter Expected Terminal Dividend Growth Rate:||5.00%|
|Calculated Intrinsic Value OUTPUT 15-Cell Matrix||Metric2||Metric3||Metric4|
|Discount Rate (Horizontal)||Discount Rate (Horizontal)||Discount Rate (Horizontal)|
|Margin of Safety||8.00%||9.00%||10.00%|
|Market Cap ($)||13B|
|Price to Book Ratio||1.69|
- Data by Ycharts or Google Finance
- Dividend triangle chart is updated every 6 months.
- All other metrics are updated every 5 minutes (price) or weekly.
- The PDF format includes only comments (no metrics) and are reviewed every 6 months.