Emera Inc 2

Yesterday, I may have gotten off topic a bit, but there are many people that do not like utilities to be run by private corporations. Today I will talk about this stock and how well it has done over the past 5 and 10 years. Tomorrow, I will talk about whether or not its price is reasonable and what analysts say.

I own Emera Inc. (TSX-EMA). I first bought this company in 2005 and then bought more shares in 2011. To date I have made a total return of 16.5% per year. The portion of my return attributable to dividends is 4.45% per year or 27% of my total return. After 7 years investing in this stock, I am making a dividend yield of 7.2% on the original shares that I bought.

This stock used to have a good dividend and low growth; however things have changed over the past 5 years. The dividend yield has gone down somewhat and the dividend growth has gone up. The current dividend yield is 3.96 and the 5 year median dividend yield is 4.44%. The 5 and 10 year growth in dividends is 8% and 4.4%. All this good growth in dividends has occurred since 2008.

The last dividend increase in 2011 was for 3.8%. However, there was a couple of dividend increases in 2010, so the total dividends received in 2011 was up 12.9% over the total dividends received in 2010. The 5 year median Dividend Payout Ratios are 68% for earnings and 38% for Cash Flow. The DPR are fine.

The 5 and 10 year total returns are 12% and 11% per year, respectively. The portion of this return attributable to dividends is 4% and 4.3% per year, respectively. That means that the dividend payments make up around 34% and 38% of the total returns.

For both revenue and earnings, the last 5 years were better than the last 10 years. Revenue growth per shares over the past 5 and 10 years is 7.9% and 4.2% per year respectively. The growth in EPS is 12.2% and 5.2% per year over the past 5 and 10 years. Growth in Cash Flow is not quite so good, with 5 and 10 year growth at 4% per year.

For Book Value, there has been no growth over the past 5 and 10 years. The Book Value dropped 17% with the change in Accounting Rules. Emera has decided to go from Canadian GAAP to US GAAP rules (rather than go to the IFRS rules). Going to US CAAP rules is an option for some Canadian companies. By these rules, if they had been in place in 2010, Book Value would have gone up by 10%.

This is a utility and utilities tend to have rather high debt ratios. This stock is no exception and the debt ratios tend to be towards the high end for utilities. The current Liquidity Ratio at 1.24 is ok and it is higher than the 5 year median ratio of just 0.97. The current Debt Ratio at 1.36 is also ok, and it is slightly lower than the 5 year median of 1.40.

The current Leverage and current Debt/Equity Ratios are ok at 4.77 and 3.51, but rather high and are higher than their respectively 5 year median ratios of 3.00 and 2.00. (See my site for further information on Debt Ratios.)

The Return on Equity for 2011 is very good at 16.6%. The ROE 5 year median rate is also good at 11.6%. The ROE based on comprehensive income is quite a bit lower at 9.2% with a 5 year median rate also of 9.2%. Some analysts think we should look to the ROE based on comprehensive income rather than net income. This 9.2% does not quite make it into the good range of 10% to 15%.

The number of shares outstanding has been rising with the growth over the past 5 and 10 years at 2% and 2.3% per year. The growth seems to be mostly employees buying shares under the company’s purchase plan and stock options. Although with the increase in 2011 of 7% in shares, they have been acquiring assets.

I look at growth per share compared to just growth. For example, the Revenue growth over the past 5 years was 10.2%, but the revenue growth per share was 7.9%. As a shareholder, I think that the growth per share is what really counts.

This is a utility stock and as such it is suitable for conservative investors looking for dividends and growth. The dividend growth of 12.9 in both 2010 and 2011 probably will not continue. I would expect lower dividend growth in the future. As I said above the most recent one was 3.8%.

Emera Inc. is an energy and services company that has two wholly-owned regulated electric utility subsidiaries, of Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Emera also owns 19% of St. Lucia Electricity Services Limited, and 25% of Grand Bahamas Power Company that serves 19,000 customers on the Caribbean island of Grand Bahamas. Emera also owns the Brunswick Pipeline; Bayside Power, in Saint John, New Brunswick; Emera Energy Services; a joint venture interest in Bear Swamp northern Massachusetts; a 12.9% interest in the Maritimes & Northeast Pipeline; and an 8.2% interest in Open Hydro. Its web site is here Emera. See my spreadsheet at ema.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.