Emera Inc 2

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I own this stock of Emera Inc. (TSX-EMA, OTC-EMRAF). I found it on a dividend growth stock list some time ago. I first bought this stock in 2005 and then some more in 2011. I have made a total return of 14.96% per year on this stock. Of this return, 4.33% is attributable to dividends and 10.63% is attributable to capital gains.

When I look at the insider trading report, I find $11.6M of insider selling and $0.4M of insider buying. That gives a net of insider selling of $11.1M. The selling seems to involve stock options. The company not only has options, but option like vehicles like Performance Share Units (PSU) and Deferred Share Unit (DSU).

The CEO has shares worth $0.5M and has options are worth $43M. The CFO has shares worth $0.3M and has options worth $6.8M. An officer has some shares and has options worth $5M. A director has some shares and has options worth $2.8M. This is just to give you an idea on insider share ownership and option values.

I get a Graham Price of $22.46 for 2013. The 10 year low, median and high median Price/Graham Price Ratios are 0.93, 1.07 and 1.20. Using the current stock price of $35.72, I get a P/GP Ratio of 1.59. My spreadsheet shows a 10 year median Price/Book Value per Share of 1.79 and a current P/B Ratio of 2.82. The current P/B Ratio is some 58% higher than the 10 year median ratio. Both these tests say that the stock price is quite high.

The 5 year low, median and high median Price/Earnings Ratios are 14.14, 16.63 and 18.70. I get a current P/E 20.18 based on 2013 earnings $1.77 and stock price of $35.72. I get a current dividend yield of 3.92% and a 5 year median dividend yield of 4.25%. The current yield is some 8% higher than the 5 year dividend yield. These tests say that the stock price is on the high side, but not by very much.

Unless there is a particular reason not to use the dividend yield test, this is the test that is the best for dividend paying stocks. The stock is therefore on the high side. However, the dividend yield is still good at 3.9%.

When I look at the analysts' recommendations, I find Buy, Hold and Underperform recommendations. The consensus recommendation would be a Hold. The 12 months consensus stock price is $36.90. This implies a total return of 7.22%, with 3.92% from dividends and 3.3% from capital gains. Some analysts think that the stock price will be lower in 12 months.

This is a low risk stock with a relatively good dividend yield. The company seems to have a target of growth dividends and earnings at 4 to 6% over the medium term that seems reasonable. This is a utility stock which people buy for the low risk and good dividend. In the longer term, capital gains on dividend stocks tend to equal dividend growth. So a 4% dividend and 4% capital gain is a good return for a utility stock.

A number of analysts say the same thing. That is they think that the dividend is good, the company is solid but the stock is a bit pricey. Some investors have been interested in the dividend yield because what you get from bonds is so low.

As far as bloggers go, the Dividend Girl is buying this stock. This blogger has a rather interesting approach to investing. The Happy Capitalism blogger also review this stock a while ago. And, there is an interesting article in the Financial Post late last year called "Emera's timely $175-million deal".

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 or StockTwits.