July 12th, 2010 | 
Category: Our third competitor to Just Energy (TSE:JE.U) in my Energy Utility Comparison is Emera.
Emera is a 2.97B$ company with operation in Canada, the US and the Caribbean. Emera is particularily strong in the Atlantic Canada and owns Nova Scotia Powers. If you remember my Fortis post, you’ll notice that Fortis is strong on the West Coast and now Emera is strong in the Atlantic Canada which means there is little competition between the two except for the Caribbean.
Earnings History
Emera’s earnings for the past years is below and they show a nice positive trend.
- 2010 earnings per share $1.68 (based on today’s price).
- 2009 earnings per share $1.56.
- 2008 earnings per share $1.29.
- 2007 earnings per share $1.36.
- 2006 earnings per share $1.14.
The earnings show a nice growth in their company and their dividends also show consistent growth with 16 increases in the past 18 years with the most recent increase this past quarter.
Dividend History
This is the type of graph we like to see. Combine that with the year over year earnings growth and it makes you look twice at the company.
Their payout ratio over the last 5 years averages to 72.9% which is on the high side compared with Fortis with a payout average of 57.2% over the past 5 years. I like to look at the payout ratio has it can be an indicator that a company can grow its dividend or that it may have challenges. The banks tend to have a payout ration in the 40% if you are curious.
Thoughts
Emera (TSE:EMA) currently has a dividend yield of 4.32% which is relatively decent. Just Energy and Gaz Metro are higher but they are income trust with higher payout ratio. Fortis is at 3.98% which isn’t too far from Emera but it has a lower payout ratio.
Emera is showing a good pattern over the past 5 years and seems to be growing its business in the US. If they can sustain their growth and dividends, it looks like it could be a winner.
Readers: Do you own EMA? Have you research EMA?
Disclosure: Long EMA
I bought EMA back in March after being impressed with its increasing dividends and it's payout ratio that just squeaked by my max of 70%. Utilities are so boring and consistent… I love em! Enbridge is my golden boy though, Emera and Fortis will have to fight for my affection.
Love the comment! They will have to fight for my affection
What about Just Energy, have you looked at it?
I'm hesitant about income trusts. My strategy involves growing dividends. Although Income trusts pay fat dividends, they never seem to grow and their dividends also have a tendency to be cut in slow years. I'm mostly waiting to see what 2011 brings and see which corporations cut dividends, and who maintains and grows them.
Even if a person was to buy $5000 worth of income trusts each year for 20yrs and put them in a TFSA, you would be light years ahead of someone making 1-3% with the banks.
I really want to buy into LIQ.UN because it doesn't matter what happens in your life; You lose your job, you drink. You get a new job, you drink. BPF.UN looks good too. Boston Pizzas are popping up everywhere. Ahh decisions, decisions.
I hold ENB, no FTS or EMA, yet. FTS will likely be one of my next picks, now that I have a telco bought and paid for (BCE). FTS is just as dull as Enbridge, which is why I like it!
I wrote Passive a few weeks ago, I'm very tempted to put JE.UN into my TFSA for 2011; at least $2,500 of it. The distributions will be too sweet to avoid:
http://www.marketwire.com/press-release/Just-Energy-Income-Fund-to-Convert-to-a-Corporation-TSX-JE.UN-1111895.htm
I have LIQ.UN in my TFSA, but I should look into the distribution come 2011.
I heard that JE.UN has already incorporated and they are keeping the same distribution schedule and payout.
PS I looove commodities too. They're like the reliable boy in high school who you can always fall back on. =)
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