Investing in the stock market can be something of a gamble. But not, it
seems, if you were smart enough to invest in Emera.
While the rest of the market has been a frightening roller coaster ride the
past few years, the stock of Nova Scotia Power's parent company has been sailing
along, blissfully ignoring the ups and downs of your everyday run of the mill
Next time you open your power bill consider this: over the past five years
Emera's stock price has gone up about 60%.
If you had purchased Emera stock in May 2007 it would have cost you just
about $21 a share. Monday morning the stock opened at $34.26 a share. At a time
when, for many investors "Freedom 55" has become "work until I'm 85", that's a pretty sweet
But that's not all.
The stock holders also get a dividend. Last week, Emera
announced a quarterly dividend of $0.36875 per preferred share. In fact, Emera
says its dividend has increased more than 50% over the past five years.
Emera owns utilities in Maine, New Brunswick and the Caribbean. But Nova
Scotia Power is by far its largest holding, a utility that is guaranteed by law,
a return on investment of 9.2% a year.
No wonder the stock has done so well during tumultuous financial
Keeping its investors happy is the number one priority for a publicly
traded company. Emera's stock performance goes a long way to explain the Fortune
500-type compensation packages that have been awarded the company's senior
Emera has certainly taken care of its shareholders. And, if you are one of
its senior employees, you would have to have a lot of nerve to complain about
your pay cheque.
If it wasn't for that pesky group known as the consumer, this would be one
rosy financial tale.
Update Monday 4:45pm
After reading this post Emera spokesperson Sasha Irving sent me this clarification on the company's rate of return:
"The Nova Scotia Utility and Review Board (UARB) sets Nova Scotia Power's
allowed return on equity, not a guaranteed one. NS Power has the opportunity
to earn within that range, but it is not a guarantee. In the 2012 rate settlement
agreed to by customer representatives and approved by the UARB, NSP's ROE
was set at 9.1% to 9.5%, a reduction from 2011. That range is competitive with
those offered to investors by other Canadian utilities and energy sector firms.
Achieving this happens only by Nova Scotia Power running its business as
efficiently as it can while delivering service to customers."