We need every last drop of water that we can find on this planet. And we will need a lot more.
America today has 327 million people. The US population is expected to rise to 440 million by 2050. So the US government is investing heavily in water infrastructure.
PricewaterhouseCoopers estimates that private spending on drinking water infrastructure will total $ 60 billion by 2027. For the next 25 years, total wastewater treatment alone will exceed $ 10 billion a year.
Such steady and predictable investments are a major reason American water stocks are among the safest investments out there. Many also offer solid returns.
Middlesex Water Co. (MSEX) is one of the oldest water companies in the United States. That business began in 1897, and the stock has had solid returns for years in the form of capital appreciation and quarterly dividend payments.
2021 appears to be seeing another flood of earnings, with the stock already posting a solid 9.9% gain. Not bad for a low risk utility game.
There are even more water stocks that are great for any income investor’s portfolio.
- American States Water Co. (AWR): Due to the constant demand from the growing California population, AWR is incredibly stable. And with a safe and reliable dividend yield of 1.7%, it’s my preferred income-based water feature.
- California Water Service Group (CWT): This is another major California water company. Considering that CWT has never reduced its dividend payout in the 35 years it has been paid out, this one can be easy to rest on in your portfolio.
- Xylem (XYL): While the company doesn’t pay a dividend, it is one of the leading water infrastructure companies. The company is exposed to global demand for water infrastructure and generates more than half of its sales outside of the United States.
If you prefer to get a broad exposure to the water market, consider purchasing the Invesco Water Resources ETF (PHO).
PHO has everything from utilities to infrastructure companies – including all four stocks I just mentioned. You can even tap into the income tap through its 0.5% dividend yield.
Bottom line: if you want a reliable source of income, all you have to do is look for such unstoppable water investments.
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