Category: Water

Liquid Assets: The Best Water Utility Stocks to Quench Your Portfolio’s Thirst

by Fred Fuld III

4 Minutes Read Time

The water utility industry is an essential sector within the broader utilities industry, providing one of the most vital resources—clean water—to millions of people across the country. Water utilities, much like their electric counterparts, are known for their stability and reliable dividend payouts, making them an attractive option for income-seeking investors.

In a low-interest-rate environment, dividend-paying utilities become even more appealing as their yields offer a better return compared to bonds and other fixed-income investments. In this article, we’ll focus on four top water utility stocks—American Water Works Co. Inc. (AWK), American States Water Co. (AWR), California Water Service Group (CWT), and Essential Utilities Inc. (WTRG). Each of these stocks has a market capitalization exceeding $3 billion and offers a dividend yield of over 2%.

American Water Works Co. Inc. (AWK)

American Water Works Co. Inc., headquartered in Camden, New Jersey, is the largest publicly traded water and wastewater utility in the United States. Serving more than 14 million people in 24 states, American Water Works has a vast and diversified customer base. The company’s focus on operational efficiency, infrastructure investment, and regulatory compliance has helped it achieve steady growth over the years.

With a market capitalization exceeding $27 billion, American Water Works is a leader in the industry. The company’s strong financial performance is complemented by a dividend yield of around 2%, making it a reliable choice for income-focused investors.

The stock has a trailing price to earnings ratio of 29 and a forward P/E of 25.

American States Water Co. (AWR)

American States Water Co., based in San Dimas, California, provides water and electricity services to customers in California and through its subsidiary, Golden State Water Company. With a history dating back to 1929, American States Water has a long track record of stability and consistent dividend payments. The company’s regulated water utility operations are its primary revenue driver, serving approximately 260,000 customers across the state.

American States Water has a market capitalization of over $3 billion and offers a dividend yield of over 2.2%. The company’s commitment to sustainable water management and infrastructure development positions it well for long-term growth.

The stock has a trailing price to earnings ratio of 28 and a forward P/E of 24.

California Water Service Group (CWT)

California Water Service Group, headquartered in San Jose, California, is the third-largest publicly traded water utility in the United States. The company provides water utility services to approximately 2 million people across California, Washington, New Mexico, and Hawaii. California Water Service Group is known for its customer-centric approach and dedication to maintaining high water quality standards.

The company’s market capitalization is over $3.5 billion, and it offers a dividend yield of more than 2.1%. California Water Service Group’s ongoing investments in infrastructure and water conservation efforts underscore its commitment to long-term sustainability and growth.

The stock has a trailing price to earnings ratio of 17 and a forward P/E of 22.

Essential Utilities Inc. (WTRG)

Essential Utilities Inc., formerly known as Aqua America, is a water and natural gas utility company based in Bryn Mawr, Pennsylvania. Essential Utilities serves more than 5 million customers across 10 states, making it one of the largest water utilities in the country. The company’s strategic acquisitions and investments in infrastructure have driven its growth and expansion.

Essential Utilities has a market capitalization exceeding $11 billion and offers a dividend yield of over 3%. The company’s diversified utility operations, coupled with its focus on environmental stewardship, make it a strong contender in the water utility sector.

The stock has a trailing price to earnings ratio of 19 and a forward P/E of 18.

Summary

As a group, these top water utility stocks—American Water Works, American States Water, California Water Service Group, and Essential Utilities—offer a compelling combination of stability, income, and growth potential. With moderately favorable earnings ratios, market caps over $3 billion, and dividend yields above 2%, they are well-positioned to provide reliable returns in a low-interest-rate environment. These companies’ focus on infrastructure investment, sustainability, and regulatory compliance ensures their long-term viability and growth. For investors seeking to add high-quality water utility stocks to their portfolios, these four companies are worth serious consideration.

Disclosure: Author owns CWT.

Water Utility Stocks Have Dividends that Flow

by Fred Fuld III

The water utility industry plays a vital role in providing safe, reliable, and accessible water supply and wastewater treatment services to communities around the world.

Their main objective is to ensure a continuous supply of clean drinking water, as well as the effective treatment and disposal of wastewater to protect public health and the environment. The industry employs advanced technologies and infrastructure, such as water treatment plants, distribution networks, and sewage treatment facilities, to manage water resources efficiently.

Additionally, water utilities are increasingly adopting sustainable practices, such as water conservation initiatives and eco-friendly treatment methods, to address growing concerns about water scarcity and environmental impact. Despite facing various challenges like aging infrastructure and funding constraints, the water utility industry remains dedicated to its mission of providing a fundamental and essential service to society.

Over the past few decades, the water utility industry has experienced significant growth and evolution worldwide. As populations have grown, urbanized, and industrialized, the demand for reliable water supply and effective wastewater management has intensified. This has led to substantial investments in infrastructure and technology to meet the increasing needs of communities.

Private entities have recognized the importance of providing clean, safe water to their citizens and have focused on expanding and modernizing water treatment plants, distribution networks, and sewage treatment facilities. Moreover, advancements in water treatment processes, including desalination, membrane filtration, and advanced oxidation, have enabled the industry to tackle water scarcity challenges in arid regions.

The growth of the water utility industry has also been driven by the rising awareness of environmental sustainability. This has led to the adoption of eco-friendly practices, such as water conservation programs, wastewater recycling, and energy-efficient treatment methods. Additionally, with the advent of digital technologies, water utilities have embraced smart metering, data analytics, and real-time monitoring to optimize their operations and enhance overall efficiency.

The industry has not been without its challenges, though. Aging infrastructure, water pollution, climate change, and financial constraints remain significant hurdles that require innovative solutions. Nevertheless, the water utility industry continues to adapt and thrive, supported by a growing understanding of the vital role water plays in ensuring public health, economic prosperity, and environmental preservation.

American Water Works Company, Inc. (AWK) is the largest publicly traded water utility company in the United States. Headquartered in Camden, New Jersey, the company was founded in 1886 and has a rich history of providing water and wastewater services to communities across the nation.

With a strong commitment to delivering safe, clean, and reliable water, American Water serves millions of customers in various states, including residential, commercial, and industrial clients. The company’s extensive network of water treatment plants, distribution systems, and wastewater treatment facilities ensures a continuous supply of high-quality drinking water and efficient wastewater management.

American Water places a strong emphasis on technological advancements and environmental stewardship, adopting smart metering and digital solutions to optimize operations and reduce water losses. Furthermore, the company actively engages in community partnerships, educational programs, and environmental initiatives to promote water conservation and sustainability.

As a vital component of the nation’s critical infrastructure, American Water Works Company continues to play a significant role in safeguarding public health and supporting economic development through its dedication to excellence and innovation in the water utility sector.

This $28.6 billion market capitalization company trades at 33 times trailing earnings and 29 time forward earnings. Quarterly earnings growth year-over-year was 5.3% on an 11.4% rise in sales over the same period. The stock pays a dividend of 1.9%.

Essential Utilities, Inc. (WTRG) is a prominent publicly traded water and natural gas utility company in the United States. Formerly known as Aqua America, Inc., the company rebranded as Essential Utilities, Inc. to reflect its broader scope of utility services. Headquartered in Bryn Mawr, Pennsylvania, Essential Utilities has a long history dating back to 1886 and has grown to become one of the largest publicly traded water utility companies in the country.

The company operates in multiple states, serving millions of customers with water and wastewater services. In addition to its water operations, Essential Utilities also provides natural gas distribution services to customers in several states.

The company is committed to ensuring a reliable and safe supply of clean drinking water, as well as effective wastewater treatment, to support public health and environmental protection. With a focus on sustainability, Essential Utilities actively engages in water conservation initiatives and environmental stewardship programs to reduce its environmental footprint.

Essential Utilities places a strong emphasis on operational efficiency and technological advancements, utilizing smart metering and data analytics to enhance service delivery and optimize resource management.

The company has an $11.2 billion market cap, a trailing price to earnings ratio of 25 and a forward P/E of 21. Earnings per share growth for next year is anticipated to be 8.7%. The dividend yield on this stock is 2.66%.

California Water Service Group (CWT) is a leading publicly traded water utility company based in San Jose, California. Established in 1926, Cal Water has a long-standing history of providing high-quality water utility services to customers in California, Washington, New Mexico, and Hawaii. As one of the largest investor-owned water utility companies in the United States, Cal Water serves millions of residential, commercial, and industrial customers, ensuring a reliable and safe supply of clean drinking water while maintaining a strong commitment to environmental sustainability.

The company operates a vast network of water treatment plants, distribution systems, and storage facilities to efficiently deliver water to its diverse customer base. Cal Water places a strong emphasis on water conservation, implementing water-saving programs, and promoting responsible water usage to address the challenges of water scarcity in California and other regions.

In addition to its core water utility services, California Water Service Group has also diversified its operations to include complementary businesses, such as providing wastewater and recycled water services. The company prioritizes technological advancements, leveraging innovative solutions to enhance operational efficiency, data management, and customer service.

This $2.96 billion market cap stock trades at 40 times trailing earnings and 25 times forward earnings. Earnings per share growth for next year is anticipated to be 9.35%. The yield is 1.94%.

There are several other publicly traded companies that sell water. Here are four more examples.

  1. American States Water Company (AWR) – American States Water is a utility holding company, with subsidiaries providing water and electricity services primarily in California.
  2. Middlesex Water Company (MSEX) – Middlesex Water Company serves customers in New Jersey, Delaware, and Pennsylvania, offering water and wastewater services.
  3. Connecticut Water Service, Inc. (CTWS) – Connecticut Water Service operates in Connecticut, Maine, and New Hampshire, providing water utility services.
  4. SJW Group (SJW) – SJW Group serves customers in California, Texas, and other western states, offering water utility services.

As societies become more conscious of water’s preciousness, the water utility industry is likely to continue its growth trajectory, prioritizing sustainability and resilience in the face of future uncertainties.

Disclosure: Author owns CWT.

The Thirst for Dividends: Top Yielding Water Utility Stocks

by Fred Fuld III

Many years ago, I began investing in water utility stocks. I assumed that any company that can sell something that is ubiquitous as water, must have a great business. It ended up that all the water stocks I purchased got bought out by another company, at a much higher price than what I paid for it.

Water utilities don’t pay as high a dividend yield as electric utilities or gas utilities, but there are several water utility stocks with yields over 1.7% to 4.0%. Here are a few of these stocks.

American Water Works Company (AWK) is a $29.1 billion market cap water utility which yields 1.5%. The company provides water and wastewater services in 16 states. The stock has a trailing price to earnings ratio of 40.5 and a forward PE of 37.7.

California Water Service Group (CWT) provides water utility services in California, Washington, New Mexico, and Hawaii. This $3 billion market cap company trades at 26 times trailing earnings and 33 times forward earnings. It pays a dividend yield of 1.56%.

Middlesex Water Company (MSEX), a $1.5 billion company, provides water services in New Jersey, Delaware, and Pennsylvania. The stock trades at 41 times trailing earnings and 39.5 times forward earnings. The stock yields 1.24%.

The York Water Company (YORW), based in Pennsylvania, is a $685 million company. It has a trailing PE of 42 and a forward PE of 39.5. The yield is 1.43%.

I might be all wet but one of these water companies might just clench your portfolio thirst for dividends.

Disclosure: Author owns CWT.

Water Stocks are Floating on Dividends

by Fred Fuld III

If you are looking for growth along with income, you should check out the water utilities. Most communities are served by governmental water district entities, but residents of some communities buy water through publicly traded companies that own water rights. The nicest feature about these companies is that they are practically recession-proof since people don’t stop showering or drinking water. There are several of these water companies that investors can choose from.

One example is American States Water (AWR), founded in 1929, which is a distributor of water in over 70 communities in California. It trades at 35 times forward earnings and pays a yield of 1.58%. Last summer, the company raised its dividends by 7.8%. Earnings for the latest quarter were up significantly, by 23%, year over year.

Aqua America (WTR) distributes water to customers in Pennsylvania, Texas, North Carolina, Ohio, Illinois, New Jersey, New York, Florida, Indiana, Virginia, Maine, and Georgia. The stock has a forward price to earnings ratio of 24, and yields 2.41%. The company has raised its dividends every year since 1988 and has had many stock splits during that time.

Connecticut Water Service (CTWS) trades at 29 times forward earnings and yields 1.83%. The company, which was founded in 1956, serves customers in over 50 towns in Connecticut.

Maybe I’m all wet but one of these water companies might just clench the thirst of your portfolio.

Disclosure: Author didn’t own any of the above at the time the article was written.