EMERA INC. $20 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 112.3 million; Market cap: $2.2 billion; Price-to-sales ratio: 1.7; SI Rating: Average) generates and distributes electricity to roughly 600,000 customers in Nova Scotia and Bangor, Maine.

Over the past few years, Emera has steadily expanded into new areas in order to cut its reliance on Nova Scotia, which still accounts for 85% of its revenue. It owns 12.9% of the Maritimes & Northeast natural-gas pipeline and 50% of a hydroelectric facility in Massachusetts. Emera has also expanded into the Caribbean region. In January 2007, it paid $22 million for 19% of the main power utility in St. Lucia. Last September, it bought 25% of Grand Bahama Power Company for $41 million.

In April 2009, Emera formed a partnership with Algonquin Power Income Fund (Toronto symbol APF.UN), which owns or has interests in 41 hydroelectric facilities in Canada and the United States. Emera will pay $27.6 million for a 9.9% stake in Algonquin, with an option to buy an additional 5% of the fund over the next two years.

Algonquin and Emera have also formed a 50/50 joint venture that will buy the Sierra Pacific Power Company’s power-generation and distribution businesses for $116 million U.S. Sierra serves 47,000 customers in Lake Tahoe, California. The purchase should add $6 million to $7 million (Canadian) to Emera’s annual earnings, and should be finalized sometime next year.

To put this investment in context, Emera earned $62.8 million, or $0.53 a share, in the first quarter of 2009. That’s down 9.5% from $69.4 million, or $0.58 a share, a year earlier. If you exclude an unfavourable accounting adjustment at its hydro joint venture in Massachusetts, per-share earnings fell 1.7%, to $0.59 from $0.60. Revenue rose 5.9%, to $403.7 million from $381.2 million.

Emera trades at 14.2 times the $1.41 a share it will probably earn this year. The $1.01 dividend yields 5.1%.

Emera is a buy.