New Purchase: Emera

Following up on my article last week that covered my first purchase in my children’s tuition fund, I’m updating my portfolio with a second purchase. I actually bought shares of 4 different companies in January, but I thought it was more fun to discuss them over 5 different weeks  hahaha!

As the market dropped like a rock over the first three weeks of 2016, I looked at some interesting picks for a 10-15 year investment horizon.

I purchased 50 shares of Emera (EMA) (EMRAF)

Investment Thesis

As long as EMA is using this cash flow to generate more projects, we should see consistent sales growth. Notably, 2 projects (a participation in Maritime Link and an undersea power cable) should be operating in 2017. Surprisingly enough, the budget is actually being followed to the letter and there shouldn’t be any excess spending (maybe we should hire EMA’s management to oversee a few Government handled projects?).

The future looks bright for EMA as it shows several projects for the next decade. Both revenues and EPS have grown steadily over the past five years and the dividends have followed accordingly. EMA is definitely a strong utility to hold. EMA reported clockwork results on November 13th for its Q3. Earnings are up $0.04 EPS compared to last year. Management expects the TECO acquisition should boost EPS by 5% in 2017 and growing to more than 10% by the third full year of operation (2019). EMA restated its dividend growth target of 8% through 2019 and expects to keep this pace past 2019. EMA continues to be a strong holding for any Canadian dividend growth investor.

An investment in EMA is also an investment in a relatively high dividend yielding stock. At the moment, there are a few very interesting high yield (over 4%) stocks on the Canadian market. It is also a gauge of stability. While the Canadian stock market was dropping faster than the 20 inches of snow that fell on our heads last night, EMA posted a solid and steady return coming from both its dividend payment and stock value appreciation: