Who they are:
It’s a well-known, established Canadian dividend-payer in the energy sector, generating primarily electricity and making sure that electricity gets to their customers. A bit more details from the Emera website:
“With strategic energy services and infrastructure that includes electric utilities in the Northeastern US, Atlantic Canada, St. Lucia, Grand Bahama and Barbados, a pumped storage hydro-electric facility, natural gas pipelines, a gas-fired power plant, an energy services company and a renewable tidal energy company, Emera has a diversified portfolio with $5.7 billion in assets.”
Indeed.
Why I picked them:
•Emera (EMA) continues to evolve, becoming more diverse; growing investments (quotations directly from EMA website):
-“For 80 years, Nova Scotia Power Inc., a subsidiary of Emera, has been the primary supplier of safe and reliable power to Nova Scotians.”
-“In 2001, Bangor-Hydro Electric Company was acquired to provide a secure source of electricity for 117,000 customers in eastern Maine.”
-EMA owns 19% of St. Lucia Electricity Services Limited, an electricity utility serving some 50,000 customers in St. Lucia.
-EMA owns 25% of Grand Bahama Power Company, serving some 19,000 customers on the Caribbean island of Grand Bahama.
-EMA has a 50% joint venture interest in Bear Swamp, a hydro-electric facility in Massachusetts.
-EMA has a 12.9% interest in the Maritimes & Northeast Pipeline and built the Brunswick Pipeline, both transport natural gas to customers in Atlantic Canada and northeastern U.S.
-EMA owns Emera Energy Services, an energy management company, Emera Utility Services, the largest utility services contractor in Atlantic Canada, Bayside Power, a gas-fired power plant located in Saint John, New Brunswick.
•They own an 8.2% interest in OpenHydro, a renewable tidal energy company.
•More recently, in November 2010, Emera announced plans with Nalcor Energy to bring energy from the Lower Churchill Project to Newfoundland and Labrador as well as to consumers in the Maritime provinces and New England. Under the agreement, Nalcor will build the generating facilities; Emera and Nalcor will jointly develop transmission capabilities to enable the movement of energy from the Churchill River. This agreement will promulgate a new, regulated transmission utility in Newfoundland and Labrador that will create subsea transmission between Newfoundland and Nova Scotia for the next 35 years. This phenomenal investment is worth over $6 billion CDN; major infrastructure.
•Current dividend yield about 3.5% (steady and fits my wheelhouse).
•Five year average dividend yield over 4% (solid).
•Dividend payout ratio (a tad high) around 70%, but in line with their five year average ratio of about 75%.
•Five year average dividend growth rate over 5% (good).
•Growing close to $4 billion in market capitalization (good).
•Little competition in Atlantic Canada as a power source (very good, the only major game in town).
•Increasing earnings over the last few years; (2010 was about $1.6 billion (very good)).
•Flying below media hype for the most part, Emera increased their dividend to $0.325 in November 2010, their second “bump” this year (excellent).
•Paid dividends consistently, every quarter for almost 20 years; since 1992 (excellent history).
•Has had 17 dividend increases since 1992 (excellent).
I bought Emera because simply put, I couldn’t find many reasons not to. It is also a holding in XDV and I think most dividend investors would do very well to hold many of the stocks in this ETF. Just my opinion (and part of my long-term plan).
In closing, I bought a few shares of Emera because Nova Scotians, New Englanders and folks in the Carribean are just like me, we all need power and electricity to live. Like I mentioned in an earlier post, you can put off buying a car, a new suit or even pair of shoes but I doubt you will put off turning the lights on when you get home from work tonight. I know I didn’t. You’ll also probably fire up your computer (to read this post 🙂 or no doubt catch a hockey game on the tube this week – all requiring electricity. Like other Canadian-dividend payers in my portfolio, my plan to is reinvest all dividends paid to buy more Emera shares every quarter. While I wish I could have purchased EMA lower than my $29+ entry point early last month, I really don’t mind what I paid to get a bunch of shares. I got some other stocks on the cheap this summer and the reality is, you can’t do it all. Also, my $29+ per share will look pretty good when EMA moves to over $35 in 2011. Just a hunch. Finally, I simply enjoy being invested than sitting on the sidelines waiting for the perfect Emera buying opportunity. I’m not into timing the market. Forecasting stock prices is like forecasting the weather – I figure I’m doomed in each. Instead, I’d rather be in the market at reasonable prices and get paid in the process.
Hopefully my primary investing strategy, my dividend investing strategy will continue to work, one more Canadian dividend-payer at a time…
What do you think about my purchase? Good or bad or indifferent, I’d like to know!
Any dividend-paying stocks you have your eye on?
