$10,000 in Emera Stock Could Return $456 in Dividends and $670 in Capital Appreciation

Emera is a top-quality dividend-paying recession-proof stock for your portfolio.

| More on:
Various Canadian dollars in gray pants pocket

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Emera (TSX:EMA) is a utility company that services over 2.5 million customers across the Caribbean, the U.S., and Canada. Its customers include residential, commercial, and industrial clients.

Over 95% of Emera’s earnings come from regulated operations and the quality and predictability of its earnings and cash flow are robust. With its stable and consistent revenue streams, as well as a tasty forward yield of 4.56%, Emera is a safe dividend stock and has been recommended multiple times as a great option for people seeking a regular source of income.

An overview of Q1 results

Emera released its financial results for the first quarter of 2021 on May 12. Net income for Q1 fell almost 50% to $273 million, or $1.08 per share, compared to $523 million, or $2.14 per share, in the prior-year period.

However, adjusted net income was $243 million or $0.96 per share compared to $193 million from the same period the previous year. The growth in the company’s quarterly adjusted net income was mainly due to increased earnings at Emera Energy Services (EES), an increase in earnings at People’s Gas (PGS) as well as Tampa Electric, coupled with lower corporate interest and operating and maintenance of general expenses.

Its quarterly adjusted EPS saw an increase of $0.17, to reach $0.96, which was due to continued strength in the regulated portfolio.

Since 2018, Emera has retired over $1 billion of holding company debt and reduced its holding company debt to a total debt ratio to below 40%. The past 12 months have seen Emera’s business generate $1.4 billion of normalized operating cash flow, allowing it to improve its leverage multiples.

What’s next for Emera investors?

Emera says it is committed to investing between $7.4 billion and $8.6 billion through the end of 2023 in renewable and clean energy solutions as well as infrastructure modernization. It expects investments to drive a rate base growth of 7.5% to 8.5% on an average annualized basis over the period.

The company is currently on track to deploy over $2 billion of capital investment in 2021 to help drive rate base growth and also advance its strategies. Further, Emera filed a petition to allow for an increase in 2022 base rates at Tampa Electric by $295 million.

Emera President and CEO Scott Balfour strongly believes that the company is off to a “…solid start this year” thanks to its proven strategy of dealing with safely delivering cleaner, reliable and affordable energy for over 15 years.

The company’s capital investment plan is mainly being funded via internally generated cash flows as well as debt raised at the operating level. It has also provided an annual dividend growth guidance of 4-5% through to 2022.

There have been reports of the Caribbean nation of Dominica planning on taking over the island’s electric utility, Dominica Electricity Services Ltd. Emera’s subsidiary owns 52% of DOMLEC. The company has kept silent on this.

Emera stock closed last week at $56.34, and analysts have given it an average target price of $60.13. That’s an upside of 6.72%. Not a bad stock addition to one’s portfolio at all.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends EMERA INCORPORATED. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

More on Dividend Stocks

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Parents: Here’s Every Credit and Benefit You Can Claim From the CRA

Parents have it hard already, so make sure the CRA is doing everything for you by dishing out payments you're…

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

3 Canadian Dividend Stocks to Buy and Hold for Life

These dividend-paying stocks have solid earnings base to support their payouts for decades.

Read more »

A golden egg in a nest
Dividend Stocks

Create a Million-Dollar TFSA With Just $1,000

If you have a TFSA, you can easily make a million-dollar portfolio by investing on a consistent basis in this…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Canadian Stocks With Over 6% of Dividend Yield

Boost your passive income with three safe dividend stocks.

Read more »

TFSA and coins
Dividend Stocks

TFSA Pension: 2 TSX Dividend Stocks to Buy Now and Hold for Decades

These top TSX stocks pay great dividends and look cheap to buy right now for a TFSA retirement fund.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

TFSA Dividend Income: 2 TSX Stocks to Buy on the Pullback

These TSX stocks look oversold and pay attractive dividends that continue to grow.

Read more »

oil tank at night
Dividend Stocks

1 Top TSX Energy Stocks for Summer 2022

TSX energy stocks have tanked recently, but they could enjoy a nice summer rally. Here's one top stock I'm eyeing…

Read more »

TIMER SAYING TIME FOR ACTION
Dividend Stocks

Market Correction: 2 Cheap TSX Dividend Stocks to Buy Now for a Self-Directed RRSP

These top TSX dividend stocks look cheap right now for a self-directed RRSP focused on total returns.

Read more »