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Is Emera A Buy Or A Hold?

Ploutos Investing profile picture
Ploutos Investing


  • Emera is a diversified utility company operating in Canada, the United States, and the Caribbean.
  • The company has an active development pipeline that should ensure long runway of growth.
  • Emera has a plan to increase its dividend by 8% through 2020.
  • Its share price can be impacted by the rising treasury yield.

Investment Thesis

Emera (OTCPK:EMRAF) (TSX:EMA) is a diversified utility company operating in Canada, the United States, and the Caribbean. The company has an active development pipeline that should ensure long runway of growth. It is also planning to increase its dividend by 8% through 2020. However, its share price may continue to be impacted by the rising treasury yield. Despite its strong future growth, investors should be careful finding the right entry point.

Description: Image result for emera

Source: Company Website

Reasons why we like Emera's Business

Geographically diversified

Emera has gradually transitioned from a Canadian utility company to a company where majority of its earnings come from operations in the United States. As can be seen from the map below, the company operates in the Atlantic provinces of Canada, several states in the United States, and the Caribbean. Emera's diversification minimizes the risks of any major unexpected events that might happen to one region. In addition, its diversified assets also reduce the impact of any change in regulatory policy in a specific regulatory jurisdiction.

Source: Investor Presentation

A Healthy Development Pipeline

Emera has a healthy development pipeline of projects. As can be seen from the table below, its total capital expenditure through 2021 is about C$8.4 billion.

Development Projects in C$ Million (Source: Investor Presentation)

Significant Growth Opportunity in Florida

As mentioned in the previous paragraph, Emera has about C$8.4 billion of development projects through 2021. One of the places where the company has a lot of growth opportunities is its operation in Florida. The company plans to invest US$883 million to build 600MW of solar capacity over the period of 2018 to 2021. The project is expected to incrementally increase its annual net earnings by about US$50 million upon completion in 2021. Emera has an allowed ROE of 10.25% on this project. Beside the solar project mentioned, the company is also

This article was written by

Ploutos Investing profile picture
I am a value focused investor. Stocks rise and fall for many different reasons that we often cannot predict. Eventually, it is those companies with a wide moat and the ability to generate cash flow that prevail. Therefore, my investment focus is to find value stocks that are able to generate cash flow, with sustainable dividends and provide growth over time. I focus my attention on analyzing large-capped dividend growth stocks, REITs and ETFs. I aim at providing a quarterly update and insights on stocks I follow. Please feel free to browse the articles that I wrote and provide any comments.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (4)

I recommend taking a small position now and average down if the price dips
fintax profile picture
Have owned and dripped since 2013. A keeper in my portfolio. It generates the income I need - let my kids worry about capital gains or losses.
Good write-up, thanks.
George Fisher profile picture
I owned EMRAF for several years after finding it when it bought my Maine and Maritimes utility and transmission co. Sold it to pay college tuition bills, and have been reestablishing my position. I like the proposed underwater tranmission line directly from NS to the Pilgrim nuke plant in Plymouth MA, bypassing the environuts' impact on the other proposed route though NH and VT.
Thank you for your analysis. I hope that you write a follow-up article when you think we’re at a better entry point.

I would love to know more about how the tax bill hurts utilities. I would have thought that a strengthening economy would help utilities as more power will be needed.

I also hope that you write more articles on Canadian companies. The exchange rate is too high for me to convert from CAD to USD right now. Canadian companies with US exposure look very appealing.

What is your target price for EMA?
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