EMERA INC. $31 - Toronto symbol EMA

EMERA INC. $31 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 114.0 million; Market cap: $3.5 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.2%; TSINetwork Rating: Average; www.emera.com) gets 70% of its revenue from Nova Scotia Power Inc., which is Nova Scotia’s main electrical-power supplier. The rest comes from its investments in pipelines and power companies in the U.S. and Caribbean. Emera is expanding into other businesses and countries. For example, it recently paid $85 million U.S. for 38% of Barbados Light & Power Co. Ltd. As well, its $350-million Brunswick Pipeline, which pumps natural gas from Saint John, New Brunswick, to the U.S. border, began operating on July 16, 2009. Thanks to these new operations and a lower tax bill, Emera’s earnings rose 20.1%, to $44.8 million from $37.3 million a year earlier. Earnings per share rose 18.2%, to $0.39 from $0.33, on more shares outstanding. Revenue rose 10.1%, to $373.5 million from $339.1 million. The higher earnings let Emera raise its quarterly dividend by 15.0%, to $0.325 a share from $0.2825. The new annual rate of $1.30 yields 4.2%. The company uses coal and oil to generate about 80% of its electricity. Tougher environmental regulations will force it to upgrade and replace equipment in the next few years. However, regulators will likely let Emera raise its rates to recover most of these costs. Emera should earn $1.59 a share this year. The stock trades at 19.5 times this estimate. Emera is a buy.