With US and Canadian stock markets tumbling down last Friday Sept 9, I decided to pull the buy trigger on a couple of stocks using some of the cash sitting on the sideline.
10 shares of Vanguard Canada All Cap Index ETF (VCN.TO)
78 shares of Emera (EMA.TO)
10 shares of VCN.TO cost about $300. It’s not a lot of money because it was the left over cash from all the dividend DRIPs in one of our TFSA accounts. Since Questrade does not charge commissions for purchasing ETFs, it makes sense to add a few shares of ETFs incrementally. (Note: If you want a Questrade referral code, give me a shout).
The main reason for adding Emera to our dividend portfolio is to increase our exposure in the utilities sector. Before the Emera purchase, the only utilities stocks that we own were Fortis (FTS.TO) and Brookfield Renewable Energy (BEP.TO).
From Google Finance:
Emera Incorporated is an energy and services company that invests in electricity generation, transmission and distribution, as well as gas transmission and utility services. The Company operates through six segments: NSPI; Emera Maine; Emera Caribbean, which includes Emera (Caribbean) Incorporated and its subsidiaries, which includes The Barbados Light & Power Company Limited, Dominica Electricity Services Ltd., Grand Bahama Power Company Limited, Emera Utility Services (Bahamas) Limited and an equity investment in St. Lucia Electricity Services Limited; Pipelines, including Brunswick Pipeline and an equity investment in Maritimes & Northeast Pipeline; Emera Energy, including Emera Energy Services, New England Gas Generating Facilities, Bayside Power, Brooklyn Energy, equity investments in Bear Swamp Power Company LLC and Northeast Wind Partners II, LLC; and Corporate and Other, which includes Emera Utility Services, Emera Newfoundland & Labrador Holdings Inc., and holding companies.
Emera has a 9 year dividend increase streak. The stock currently has a PE ratio of 14.61, a dividend yield of 4.44%, a payout ratio of 65%, a return on equity rate of 12.63%, and a price/book ratio of 2.0. The company has grown its revenue by 10.7% the last 3 years while increase its dividend by about 6.9% in the same period. Just recently Emera announced a 10% dividend increase.
The company also recently acquired Florida based TECO Energy. I really like this acquisition because it gives Emera further geographically diversification and a larger client base. In addition to the recent 10% dividend increase, Emera has extended its 8% annual dividend growth target through to 2020 from 2019. This means our yield on cost is expected to increase to about 6% by 2020. Hopefully the expected dividend growth will trigger more investors to buy Emera moving forward and drive the stock price higher.
The two purchases will add $169.28 in our annual dividend income.
Dear readers, what do you think about these two recent buys?