Emera can handle higher interest rates

Article Excerpt

Rising interest rates are generally bad news for utilities like Emera, as they increase the appeal of bonds for investors who might otherwise look to utilities. At the same time, higher interest rates increase borrowing costs for utilities. However, power regulators will likely let providers like Emera raise their power rates to offset those higher costs. Emera’s investors, in particular, will also benefit from its rising dividend on top of the Canadian dividend tax credit. EMERA INC. $62 is a buy. The company (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 265.8 million; Market cap: $16.5 billion; Price-to-sales ratio: 2.7; Dividend yield: 4.3%; TSINetwork Rating: Average; www.emera.com) owns 100% of Nova Scotia Power, that province’s main electricity supplier. It also owns Teco Energy, which it acquired in July 2016 for $13.9 billion. Teco provides electricity to more than 765,000 customers in Tampa, Florida. Emera’s other interests include power plants and natural gas pipelines in the U.S. and the Caribbean. The U.S. now supplies…

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