Dividends4Life: Most Promising Dividends in Water Utilities

Most Promising Dividends in Water Utilities

Posted by D4L | Tuesday, March 08, 2011 | | 0 comments »

Dividend payers deserve a berth in any long-term stock portfolio. But seemingly attractive dividend yields are not always as fetching as they may appear. Let's see which companies in the water utility industry offer the most promising dividends. If you focus on dividend yield alone, you might end up with Middlesex Water and Artesian Resources, but they're not necessarily your best bets. Their dividend growth rates aren't stellar, particularly Middlesex's.

Instead, let's focus on the dividend growth rate first, where Veolia Environnement leads the way. Alas, its growth rate is so steep that it may be hard to maintain for long, especially given its high payout ratio.As I see it, Aqua America offers a compelling combination, sporting a yield close to 3%, a respectable dividend growth rate, and a reasonable payout ratio. It offers some income now and a good chance of dividend growth in the future. American Water Works and SJW also look attractive, with slightly higher dividends and lower payout ratios, despite having slower dividend growth.

Source: Motley Fool

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