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Emera has had 4 years of 7% annual dividend increases and has given guidance that there will be 3 more years of 5% dividend increases.Consequently it's yield now is 5.6% and is one of the highest yields of major utilities.A good part of this dividend program has been created by the acquisition of Teco Energy,a Florida utility.Even though it is true that owning Teco has caused greater investment expenditures than planned for. Emera's CEO says that their payout ratio will stay in the range of 45-55% of adjusted funds from operations.And that means that Emera has paid for these continuous dividend increases by having continually increasing revenues and earnings.For example,revenues have more than doubled from 2014 to 2017 and earnings have more than doubled also in this same period.
The Second Quarter
Second quarter net income was $.38 per share compared to $.47 in Q2 of 2017.While e.p.s for 6 months was $1.56 compared to $1.95 in 2017.And adjusted net income for the 6 months was $313 million or $1.35 per share versus $269 million or $1.27 per share.But these are derived or accounting measurements;more importantly operating cash flow
increased from $703 million to $767 million or almost $.35 per share for the 6 month period.
Right from the start Emera found that it underestimated the investment required by the condition of the plant and by the regulated authorities.This year Emera says that it has $1.7 USD billion " of regulated rate base investment opportunities".That will include a $850 million USD investment to modernize it's Big Bend Power Station in Tampa Bay, Florida and building a number of solar power stations.Also more money will be put into it's Maritime Link that connects Maine to the grid.
The Second Half
Increases in earnings are expected in Emera Maine,Nova Scotia Power,Emera Florida and the Maritime Link.Very likely, little revenues will be generated from their new solar projects in 2018.But this blog expects operating cash flow to increase by 10% over 2017.EMA has traded in the $42-$43 price range for most of the year and a 9-10% increase in e.p.s should send the price to the $45 area sometime in the second half.
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