Emera Inc (EMA-T)

Largest distribution utility is in Florida, where population growth has soared since pandemic. Regulator in Florida is easy to deal with. Diversified. Benefits from a risk-off mentality in the market.

A boring, stable utility. Pretty much discarded last year with people chasing the AI trend. Big move since January with the flight to safety. Outlook was upgraded from Negative to Stable. Good job reducing leverage. Florida just approved storm reparation costs from 2 hurricanes in 2024.

Volatility in last month has been great for all the utilities. Not a lot of growth, only ~7%. He looks for a bit more growth. Great place to shelter for defensive positioning, plus 4.9% yield.

Very stable business that will hold up better in the face of tariffs. Canadian utility-type business. Slow but steady dividend growth. Not cheap, but dividends will be rock-solid and even more attractive with yields low in Canada.

Bumps along the road, but the price has appreciated. Utilities are always levered, so as rates go up, there's more interest expense on the balance sheet and less profit hits the bottom line. Rates coming down have helped EMA's profit. Over time, expectation is that it will be the better choice. Yield is north of 5%.

Utilities are her largest sector weight. Defensive, regulated earnings. Secular trend as we transition off fossil fuels. Long-term growth opportunities. Biggest asset is in Florida, a good jurisdiction. Stock came off due to hurricanes. Yield is 5.5%, grows at a small rate.

Likes it long term, but is enduring issues now. 

There could be a space for utilities in a portfolio, given high dividends above 5% as interest rates decline. They have exposure to Tampa which the hurricane didn't hit badly. EMA is a good income vehicle.

It is well run and lower interest rates will be a catalyst for utility companies, There are issues with parts of the U.S. due to the effects of the recent hurricane which is really the latest in a series of hurricanes.

(Note short timeframe.) Defensive. Will benefit from interest rates coming down. Asset base should grow ~7% a year, dividend by 4-5% a year. Doing what they say they will. Additional asset sales to bring debt down; with interest rates coming down, may not need to sell as much.

Operates in Florida, which has one of the fastest-growing populations.

Near term, lots of $$ coming into utilities partly because of rate cuts. That's fine. Saw generational low interest rates in 2020, and we're going to see rates ratchet slowly higher for next 15-20 years. So inflation and rates are going to be stickier, making bond proxies harder longer term.

So you need to make sure you have dividend growth. Lean toward dividend growth, rather than high dividend but low growth. He'd prefer CPX, a smaller company with better record of dividend growth, technically a lot better.

Lower rates will be favourable to it. Valuation should probably improve over remainder of the year and into 2025. Decent upside for growth, dividend safer than some higher ones. Yield is 5.5%, not excessively high.