emera

ALGONQUIN POWER & UTILITIES CORP. $11.64 (Toronto symbol AQN; Shares o/s: 256.2 million; Market cap: $3.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.algonquinpower.com) saw Emera Inc. (Toronto symbol EMA) sell 50.1 million shares in the company at $10.85 each....

CAE INC., $16.00, Toronto symbol CAE, is a leading maker of flight simulators and operates pilot-training schools in over 30 countries. It also produces simulators for military aircraft as well as mannequins and other medical-simulators for training health professionals. The company earned $239.3 million in the year ended March 31, 2016. That’s up 18.9% from $201.2 million a year earlier. Earnings per share also jumped 17.1%, rising to $0.89 from $0.76, on more shares outstanding. If you exclude costs tied to its restructuring plan and a tax adjustment, CAE earned $0.86 a share for the fiscal year. That beat the consensus estimate of $0.84....

EMERA INC. $47 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 148.2 million; Market cap: $6.8 billion; Price-to-sales ratio: 2.5; Dividend yield: 4.0%; TSINetwork Rating: Average; www.emera .com) owns 100% of Nova Scotia Power, that province’s main electricity supplier. It also owns power utilities in the U.S. and the Caribbean. In September 2015, the company agreed to buy Teco Energy (New York symbol TE). This firm supplies electricity and natural gas to 1.05 million customers in Tampa Bay, Florida. A separate subsidiary distributes gas to 510,000 customers in New Mexico. Emera will pay $10.4 billion U.S., including Teco’s debt. It expects to complete the purchase in mid-2016....

EMERA INC. $47 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 148.2 million; Market cap: $6.8 billion; Price-to-sales ratio: 2.5; Dividend yield: 4.0%; TSINetwork Rating: Average; www.emera .com) owns 100% of Nova Scotia Power, that province’s main electricity supplier. It also owns power utilities in the U.S. and the Caribbean. In September 2015, the company agreed to buy Teco Energy (New York symbol TE). This firm supplies electricity and natural gas to 1.05 million customers in Tampa Bay, Florida. A separate subsidiary distributes gas to 510,000 customers in New Mexico. Emera will pay $10.4 billion U.S., including Teco’s debt. It expects to complete the purchase in mid-2016....

ISHARES CANADIAN SELECT DIVIDEND INDEX ETF $21.88 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highestyield Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of the ETF’s assets. The fund’s MER is 0.55%, and it yields 4.3%. iShares Canadian Select Dividend’s MER is higher than, say, the iShares S&P/TSX 60 Index ETF because it’s more actively managed. Most market indexes are set up so that the stocks in the index are those with the highest market capitalization and also the most widely traded. However, the iShares Canadian Select Dividend Index ETF aims to zero in on the 30 stocks that it sees as having the highest dividend yields—and yet also the best propects for dividend growth and sustainability. The fund’s top holdings are CIBC, 8.4%; Agrium, 7.4%; Bank of Montreal, 6.0%; Royal Bank, 5.8%; Bank of Nova Scotia, 5.0%; BCE, 4.5%; IGM Financial, 4.1%; Laurentian Bank of Canada, 4.1%; National Bank, 4.0%; TransCanada Corp., 4.0%; TD Bank, 3.5%; and Emera, 3.1%....

These six ETFs hold mostly blue chip, widely traded stocks on Canadian and U.S. exchanges. All of them mirror, or track, the performance of major stock market indexes. That’s opposed to narrower indexes focused on, say, resources or themes such as solar power or biotech. Of course, you pay brokerage commissions to buy and sell these ETFs. But their low management fees give them a cost advantage over most mutual funds. Below we update our advice on all six—five buys and one we don’t recommend....

Algonquin increases cash flow and power generation with the acquisition of Empire District Electric Co.

BOMBARDIER INC., Toronto symbols BBD.A $1.84 and BBD.B $1.62, announced this week that Latvia-based Air Baltic has exercised its option to buy seven more of the company’s new CSeries passenger jets. The client had previously ordered 13 planes. Bombardier will begin to deliver the aircraft by the end of 2016. The company now has firm orders for 250 CSeries planes. Based on the list price for the aircraft, these orders are worth $18 billion (all amounts except share prices in U.S. dollars). To put that in context, Bombardier’s total revenue was $18.2 billion in 2015. However, the company typically offers discounts to customers that buy multiple planes. So the total value of its CSeries backlog is probably much less than the list price. OUR RECOMMENDATION: Bombardier is still a hold....

EMERA INC. $47 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 148.2 million; Market cap: $7.0 billion; Price-to-sales ratio: 2.5; Dividend yield: 4.0%; TSINetwork Rating: Average; www.emera.com) owns 100% of Nova Scotia Power, that province’s main electricity supplier. It also owns or invests in power plants and natural gas pipelines in the U.S. and the Caribbean. Emera recently agreed to purchase TECO Energy (New York symbol TE). It supplies electricity and natural gas to 1.05 million customers in Tampa Bay, Florida. A separate subsidiary distributes gas to 510,000 clients in New Mexico. The company will pay $10.4 billion U.S., including TECO’s debt. Emera will probably sell new shares to help pay off the short-term loans it needs to finance the deal....

In addition to TransCanada (see page 41), we like the outlook of these four utilities. Like TransCanada, Emera and Fortis are expanding in the U.S. These purchases cut their reliance on Canada, and should enhance their earnings and dividends for years to come. Canadian Utilities and ATCO have both suffered lately due to their high exposure to Alberta, where low oil prices have hurt the economy and power prices. However, their new projects should let them continue to raise their dividends....