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.