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This American Company Holds The Record For Dividend Increases
Water is a vital part of life, yet most of us take it for granted. But did you know that water delivery is also a big business? It's a multi-billion dollar industry. And while scientists agree droughts are likely to become increasingly common, the water demand will continue. And as long as there’s water to deliver, water utilities will continue to operate.
If you're familiar with dividend investing, you may have come across the term "dividend king." Dividend kings are companies that have increased their dividends for 50+ consecutive years. These are typically large, well-established companies with a long history of profitability. And today, there're 45 dividend kings.
In this article, I'll cover three water utilities you've probably never heard of - each of which has raised their dividends for 50+ years.
SJ Water (SJW)
San Jose Water company, known as SJW, was founded in 1866. It owns four subsidiaries that engage in water production and distribution, purification, parking facility management, and rental, as well as equipment sales and rental. The company is headquartered in San Jose, California. It has some real estate business, but more than 98% of its revenue comes from its water business.
After its merger with Connecticut Water Service in 2018, SJW is America’s third-largest publicly traded water utility company, with about 1.5 million customers in four states: California, Texas, Connecticut, and Maine.
Though the water industry is a very slow-growing industry in general, SJW managed to see some of the industry’s fastest growth. As of its last trading price, SJW Group had a$1.9 billion market capitalization. It currently has a 2.27%dividend yield based on its latest trading price of $63.81.
The company works in a highly regulated environment which can be one of its key challenges to growth. For example, the California Public Utilities Commission (CPUC) often jumps in and adjusts the price SJW can charge its Californian customers. That said, SJW maintains friendly terms with the regulators.
California Water Service (CWT)
California Water Service Group (CWT) is a public water utility company providing drinking water and wastewater services, including wastewater collection and treatment, which enables water recycling. Founded in 1926, the company has over 1,200 employees today. And it provides service to approximately 2 million people in 100 communities.
CWT provides its services through five subsidiary companies: California Water Service, Hawaii Water Service, New Mexico Water Service, Washington Water Service, and Texas Water Service.
Dividend investors have lots to cheer about - this company has increased its dividend 56 consecutive years. Also, the company can set aside money for growth with a reasonable dividend payout ratio (59%). For example, the Hawaii Public Utilities Commission (HPUC) has approved CWTs subsidiary, Hawaii Water Service (Hawaii Water), to acquire the wastewater infrastructure of Keauhou Community Services (KCS).
CWT is popular among investors thanks to its continuous performance and innovative business strategy. And, given the increasing need for fresh water and water treatment plants, there's a case that the company will continue to grow in the upcoming years.
American States Water (AWR)
Last but not least, we have American States Water Company. This utility service provider was founded in 1929 and today serves over 1 million people across 9 states. The company provides various operational, maintenance, and construction management services for different water-related areas through its three subsidiaries; Golden State Water Company, Bear Valley Electric Service Inc., and the American States Utility Services Inc.
Supplying water to homes and businesses is its primary source of business. That said, it has a 50-year contract with the US government to provide water to 11 military bases (which accounts for another 25% of total revenue). In addition to that, it generates electricity too.
Even though the company faced difficulties like the Great Depression, a World War, multiple recessions, and a pandemic, the company has paid continuous dividends since 1931. For the past 68 consecutive years, it has increased its dividend every year. While there are 45 dividend kings, ASW is the king of kings. No other company could raise its dividend as long as ASW.
Final Thoughts
Water is an essential component in the lives of individuals and businesses, and it will remain in high demand regardless of any potential downturn. Thus, water utility companies tend to produce reliable income for their investors.
And when considering ASW, SJW Group, and CWT these are three of the best companies in this space. They all have strong fundamentals, decent dividend yields, and promising growth prospects. So, these companies should be on your radar if you're looking to invest in income-producing stocks. The question is, which is right for you?
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