Emera Inc (EMA.TO)

Some asset sales. Next asset sale should be a catalyst, as will interest rate cuts. Lower dividend outlook hurt, growth only 1%. Stock rose in July with the rotation and bond yields coming down. He likes power names with price to growth of about 1. This one doesn't, but 5-7% EPS growth plus dividend ~6% gives you that at a lot cheaper than H or FTS.

It is long term infrastructure opportunity. He likes transmission and utilities assets and is in Florida which is a high growth area. The dividend is still growing. In general buy stocks that have growth opportunities over the next decade.

They are good operators as a distribution utility. Lower rates are a tailwind. They are selling an asset later in the year to help pay down debt. Pays a 6 1/2% dividend.

A comparable utility to CPX, but with better growth and price to growth. Cheap. Asset sales by June would be a catalyst to multiple expansion.

Its guidance is 7 to 8% but the stock has come off so there is upside if they deliver on the guidance. Even if they didn't, the downside is limited. It trades at a good price and pays a 6% dividend.

Utilities are out of favour and he owns none now, but he has owned and liked EMA in the past. Yields above 6% which can grow further. Problem is that if rates stay high for longer, shares will decline, though the yield would climb to 7%. He is watching utilities and he will eventually peck away at utilities.

Strong commodity without the problems of other companies in sector. Very stable business that has exposure to interest rates - but continues to execute well. 

It has struggled and has more debt than others in the sector. He is expecting them to sell off some of their assets which should help, along with rate cuts. The dividend is safe. It is at a good entry point.

Return on capital predictable, but replacement cost of assets very high. Good for defensive investors, but not going to appreciate capital at high rate. Lots of capital required to grow business creates situation of low returns. Politicians and consumers putting pressure on margins of business. Falling interest rates good for the business (high debt load in business). Overall, better options for investors out there. 

Could hold for dividend. Technically, can't argue with the downtrend. Hopefully, stock will find support around $45. If yes, there's consolidation and maybe downtrend is over. Wouldn't jump all over it, there's perhaps hope if doesn't break $45.

Editor's Note: The question was on utilities and her response included Fortis and Emera. Utilities are lower volatility in the long term and come with a nice yield. There is more growth ahead that we haven't seen for the past 5 to 10 years. Rising rates give a better ROE. She likes Fortis and Emera with Emera showing a little more growth and a yield of 6%.

It is a different company now with more assets in the U.S. than in Canada. In Florida they can ask for higher rates just based on its population growth. They are targeting 7% rate-based growth and 4 to 5% dividend growth. It is defensive in nature and there is a big opportunity because of its very low valuation.        Buy 8  Hold 6  Sell 2