Emera Inc. management on Aug. 10 said pumping the brakes on the company's annual dividend growth rate will help it invest in projects and drive rate base growth.

The Nova Scotia-headquartered company announced it is lowering Emera's dividend growth target from 8% through 2020 to a range of 4% to 5% through 2021. The decision "was not taken lightly," CEO, President and director Scott Balfour said on Emera's second-quarter earnings call.

Balfour told investors that the new rate will enable Emera to free up more cash for its $6.7 billion investment in rate base growth over the next three years, and that spending will drive adjusted EPS growth higher than the new dividend growth guidance.

"It's really about, for us, finding the right balance between making sure that we've got the dividend at a sustainable level and maintaining a growth profile that we think provides an appropriate and attractive value proposition for shareholders," Balfour said. "As I mentioned, we're not uncomfortable with the fact that the existing payout ratio is higher than that target on a temporary basis, recognizing the quality of the earnings stream and the predictability of that earnings stream and cash flow profile that is in front of us."

Those investments include $1.7 billion over the next five years for two major initiatives at subsidiary Tampa Electric Co. The first is retiring a coal-fired unit at Big Bend and converting another unit to natural gas; the second is developing 600 MW of solar capacity.

Emera closed its acquisition of Tampa Electric in July 2016, and Balfour said the Big Bend and solar plans were not contemplated at the time of the deal, making those investments accretive and beneficial to shareholders. On top of that, Balfour said Emera has recently identified an additional $2.5 billion of accretive rate base investment opportunities.

"The way we've always looked at it is through a traditional lens: work our way up the capital structure, starting with maximizing our operating cash flow in our businesses, which we're very focused on," Balfour said. "Obviously, the change in the dividend growth target allows us to retain more of that for our business."

The CEO said Emera has already issued $300 million of preferred equity, and the company still has room in its capital structure for more. For the rest of 2018, however, Balfour said Emera does not have any more common equity requirements.