Emera's mega-merger with Canadian Utilities reshapes the utility, dividend up again
Merger of equals creates $72B utility Emera agreed to combine with Canadian Utilities in an all-share merger of equals, creating a roughly $72 billion utility with about six million customers and a $32 billion capital plan through 2030. Emera shareholders would own about 60% of the combined company, which keeps its headquarters in Halifax. Bigger scale and a larger building program support long-term earnings growth, which is why the stock reacted well.
This is the single biggest new event of the period and the main reason EMA is moving.
Dividend raised for 20th straight year Emera raised its quarterly dividend to $0.74 per share, an annualized $2.96, up 1%. Management tied the increase to forecast rate base growth of 7-8% and 5-7% average earnings-per-share growth through 2030. A steadily rising payout appeals to income investors and supports the share price.
A fresh dividend increase is a concrete shareholder-return event that helps explain positive sentiment.
Q2 profit and adjusted EPS fell Second-quarter net income dropped to C$105 million from C$135 million, and adjusted earnings per share fell to $0.69 from $0.79. Higher interest expense, foreign-exchange losses, weaker New Mexico Gas results and a loss on the Grand Bahama sale weighed on results. Still, Emera kept its 5-7% growth target and said 2026 growth should exceed it.
Weaker reported earnings are the main counterweight to the positive merger and dividend news.
Asset sales shrink the regulated base Emera completed the sale of New Mexico Gas Company to Bernhard Capital Partners and closed the sale of Grand Bahama Power Company. Both remove regulated utility assets and the earnings they produced, which is part of why reported profit fell. The cash raised helps fund the $4 billion annual capital plan, but near-term earnings lose a contribution.
These divestitures are a real drag on reported results and explain part of the profit decline.