I usually don’t expect utility stocks to go ahead with major corporate shake-ups. Most of the time, I’m happy even if a defensive utility firm keeps investing in its infrastructure, growing earnings, and sending me a dividend every quarter. But Emera (TSX: EMA) seems on a path toward something much bigger. It recently announced a merger with Canadian Utilities (TSX: CU), a subsidiary of ATCO (TSX: ACO.X). As part of the deal, ATCO’s industrial services businesses will be spun off into a separate company, while the combined Emera-Canadian Utilities business is expected to have an enterprise value of about $72 billion and serve roughly six million customers. That’s a massive change for a utility firm investors have traditionally looked to for stability and dividend income.
Let’s take a closer look at Emera’s fundamentals and what the proposed merger could mean for its future, and whether EMA stock is worth buying before the deal closes.
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Why Emera stock is worth watching
Before diving deeper into merger details, let’s quickly look at Emera’s existing business and dividend. This Halifax-based company mainly operates regulated electricity and natural gas utilities, including Tampa Electric in Florida and Nova Scotia Power.
At the time of writing, EMA stock traded at $65.20 per share with a market cap of $20.1 billion. Despite its improving fundamentals, the company’s shares have lost 11% in six months, making it look undervalued based on its long-term outlook. Emera still offers an attractive 4.5% annualized dividend yield and has been raising dividends for 20 straight years.
In the second quarter of 2026, Emera’s adjusted net profit fell about 10% year-over-year (YoY) to $212 million. This decline was partly because of higher interest expenses, foreign exchange losses, weaker earnings at New Mexico Gas, and the sale of Grand Bahama Power.
Nevertheless, the company’s first-half adjusted net profit grew about 2% YoY to $627 million, while its operating cash flow before working capital improved by 8%. The company also invested more than $1.7 billion in infrastructure during the first half and continues to target average adjusted earnings-per-share growth of 5% to 7% through 2030.
How the merger could strengthen Emera
Beyond Emera’s existing operations, Canadian Utilities could give it a larger growth opportunity. Under the deal announced earlier this month, Emera plans to merge with Canadian Utilities, a subsidiary of ATCO, through an all-share transaction. As part of this arrangement, ATCO’s industrial services businesses will be spun off into a separate publicly traded company called New ATCO.
Existing Emera shareholders are expected to own about 60% of the combined utility business, which will continue operating under the Emera name.
The merged company is expected to have an enterprise value of about $72 billion, a $45 billion rate base, and roughly six million customers. More importantly, around 95% of its earnings would come from regulated utilities, with about 80% generated in Florida and Alberta. This strong focus on regulated operations in two high-growth markets could provide Emera with a solid foundation for steady earnings and dividend growth in the years to come.
In addition, the combined company’s planned $32 billion capital program through 2030 is expected to drive annual rate base growth of 7% to 8%.
Canadian Utilities already brings encouraging results to the table. The company’s second-quarter adjusted earnings rose nearly 16% YoY. Its fully contracted $2.9 billion Yellowhead Pipeline project has also received key regulatory approvals.
Should investors buy EMA stock before the deal closes?
After getting all approvals, the Emera-Canadian Utilities merger deal is likely to close in the third or fourth quarter of 2027. Meanwhile, Emera plans to outline its 2027 to 2031 capital and funding plan on November 6.
For long-term income investors, I think Emera looks attractive at its current price. Its 4.5% yield offers income today, while the merger could give it additional earnings opportunities over time. Although the deal isn’t guaranteed, investors would still own an established regulated utility business while waiting for the outcome.
