Updated on May 30th, 2024 by Bob Ciura
Water is one of the basic necessities of human life. Life as we know it cannot exist without water. For this simple reason, water may be the most valuable commodity on Earth.
It is only natural for investors to consider purchasing water stocks. There are many different companies that can give investors exposure to the water business, such as water utilities. Some other companies are engaged in water purification.
In all, we have compiled a list of over 50 stocks that are in the business of water. The list was derived from five of the top water industry exchange-traded funds:
- Invesco Water Resources ETF (PHO)
- Invesco S&P Global Water ETF (CGW)
- Invesco Global Water ETF (PIO)
- First Trust ISE Water Index Fund (FIW)
- Ecofin Global Water ESG Fund (EBLU)
You can download a spreadsheet with all 56 water stocks (along with metrics that matter like price-to-earnings ratios and dividend yields) by clicking on the link below:
In addition to the Excel spreadsheet above, this article covers our top 7 water stocks today, that we cover in the Sure Analysis Research Database.
This article will discuss the top 7 water stocks according to their expected returns over the next five years, ranked in order of lowest to highest.
Table of Contents
- Water Stock #7: Essential Utilities (WTRG)
- Water Stock #6: Idex Corporation (IEX)
- Water Stock #5: California Water Service Group (CWT)
- Water Stock #4: Artesian Resources Corp. (ARTNA)
- Water Stock #3: Lindsay Corporation (LNN)
- Water Stock #2: Gorman-Rupp (GRC)
- Water Stock #1: SJW Group (SJW)
Water Stock #7: Essential Utilities (WTRG)
- 5-year expected annual returns: 10.0%
Essential Utilities is the second largest publicly traded water utility in the U.S., serving approximately 5.5 million customers across ten states. The $10.1 billion company has raised its dividend for 32 consecutive years, which qualifies it to be a member of the Dividend Champions, and has paid a quarterly dividend for 78 consecutive years.
In early May, Essential Utilities reported (5/2/24) financial results for the first quarter of fiscal 2024. Its revenue decreased -16% over the prior year’s quarter, mostly due to lower natural gas prices, but the company benefited from rate hikes, customer growth and higher water and gas volumes. Given also gains from the sale of three non-regulated energy projects, earnings-per-share grew 35%, from $0.72 to $0.97, and exceeded the analysts’ consensus by $0.21.
Thanks to the asset sale, Essential Utilities now expects to exceed its previous forecast for earnings-per-share of $1.96 $2.00 this year.
Click here to download our most recent Sure Analysis report on WTRG (preview of page 1 of 3 shown below):
Water Stock #6: Idex Corporation (IEX)
- 5-year expected annual returns: 10.0%
The IDEX Corporation (IEX) is a company that sells industrial products worldwide. The business operates through three segments: Fluid & Metering Technology (FMT), Health & Science Technologies (HST), and Fire & Safety/Diversified Products (FDSP).
Inside each of the segments, IDEX owns a series of businesses in niche markets that own highly engineered and proprietary assets.
On April 23rd, 2024, IDEX reported first quarter results for the period ending March 31st, 2024. The company earned $1.88 in adjusted earnings-per-share in the quarter, down 10% from the year-ago quarter’s $2.09. For the quarter, IDEX’s net sales were $800.5 million, compared to $845.4 million, reflecting a year-over-year decline of 5.3%.
Organic sales in the quarter decreased 6% year over year, driven by lower volumes primarily in the Health & Science Technologies segment. The decline in sales was attributed to various factors including market slowness and inventory recalibrations.
Click here to download our most recent Sure Analysis report on IEX (preview of page 1 of 3 shown below):
Water Stock #5: California Water Service Group (CWT)
- 5-year expected annual returns: 10.2%
California Water Service is the 3rd largest publicly-owned water utility in the United States. The company has six subsidiaries that provide water to about two million people, mainly in California, with some additional operations in Washington, New Mexico, and Hawaii.
California Water Service was founded in 1926 and has increased its dividend for more than 50 consecutive years, which makes the company a Dividend King.
California Water Service reported its first quarter earnings results on April 29. The company reported that its revenues totaled $271 million during the quarter, which was 107% more than the revenues that California Water Service generated during the previous year’s quarter.
This represents a stronger performance compared to the previous quarter. The revenue increase was driven by rate increases over the last year and by a decision on the “2021 California General Rate Case and Infrastructure Improvement Plan” which boosted revenues by $111 million.
Click here to download our most recent Sure Analysis report on CWT (preview of page 1 of 3 shown below):
Water Stock #4: Artesian Resources Corp. (ARTNA)
- 5-year expected annual returns: 10.8%
Artesian Resources Corp. was founded in 1905 in New Castle County, Delaware. Through its subsidiaries, the company provides water, wastewater and other services, primarily in the Delaware region. Artesian Resources sells and distributes water to residential, commercial, industrial, governmental, and utility customers throughout the state.
In addition, Artesian Resources provides water for public and private fire protection in Delaware, Maryland, and
Pennsylvania. The company produces 7.9 billion gallons of water annually through 1,311 miles of water main with a population of approximately 301,000 served.
Artesian Resources Corporation (ARTNA) reported its first-quarter 2024 earnings, showcasing a net income of $4.4 million, marking a $0.7 million, or 19.1%, increase compared to the same period in 2023. Diluted net income per share
also rose by 10.3% to $0.43, compared to $0.39 in the first quarter of 2023. Revenues totaled $24.5 million, reflecting a $2.0 million, or 9.1%, increase compared to the same period last year.
Click here to download our most recent Sure Analysis report on ARTNA (preview of page 1 of 3 shown below):
Water Stock #3: Lindsay Corporation (LNN)
- 5-year expected annual returns: 11.6%
Lindsay Corporation provides water management and road infrastructure services in the United States and internationally. The business’s irrigation segment provides irrigation solutions for farmers and contributed 86% of sales in fiscal year 2022, and the infrastructure segment helps with road and bridge repairs and contributed the other 14%.
On April 4th, 2024, Lindsay reported Q2 2024 results for the period ending February 29th, 2024. The business saw diluted earnings-per-share of $1.64 which rose slightly from the $1.63 reported the same quarter of last year. However, revenues declined 9% year-over-year to $152 million.
Though irrigation demand was steady in North America, the company cited significant decline in demand for its products in Brazil given weak pricing and agricultural activity in that market.
Click here to download our most recent Sure Analysis report on Lindsay (preview of page 1 of 3 shown below):
Water Stock #2: Gorman-Rupp (GRC)
- 5-year expected annual returns: 15.5%
Gorman-Rupp began manufacturing pumps and pumping systems back in 1933. Since that time, it has grown into an industry leader with annual sales of about $655 million.
Today, Gorman-Rupp is a focused, niche manufacturer of critical systems that many industrial clients rely upon for their own success. GormanRupp generates about one-third of its total revenue from outside of the U.S.
Gorman posted first quarter earnings on April 25th, 2024, and results were somewhat weak. Net sales were $159.3 million, down from $160.5 million a year ago. Domestic sales rose 1.1%, while international sales declined $2.5 million, or 6.2%.
Gross profit was $48.4 million in Q1, or 30.4% of revenue. This was compared to $45.5 million, and 28.4%, respectively, a year ago. The gain in gross margins was due to a 230 basis point improvement in cost of materials, including a 60 basis point improvement from inventory adjustments.
Click here to download our most recent Sure Analysis report on GRC (preview of page 1 of 3 shown below):
Water Stock #1: SJW Group (SJW)
- 5-year expected annual returns: 16.5%
SJW Group is a water utility company that produces, purchases, stores, purifies and distributes water to consumers and businesses in the Silicon Valley area of California, the area north of San Antonio, Texas, Connecticut, and Maine.
SJW Group has a small real estate division that owns and develops properties for residential and warehouse customers in California and Tennessee.
On April 26th, 2024, SJW Group reported first quarter results. For the quarter, revenue grew 8.8% to $149.4 million, beating estimates by $8.9 million. Earnings-per-share of $0.36 compared unfavorably to earnings-per-share of $0.37 in the prior year and this was $0.02 less than expected.
The improvement in revenue was mostly due to SJW Group’s California business, which resulted from higher water rates. In Connecticut, the company benefited from an increase in the infrastructure recovery mechanism. Higher rates overall added $10 million to results for the quarter while higher customer usage added $1.8 million.
Click here to download our most recent Sure Analysis report on SJW (preview of page 1 of 3 shown below):
Final Thoughts
Water could be one of the biggest investing themes over the next several decades. An increasing global population is only going to cause demand for water to rise in the future.
And, given the fact that water is a necessity of human life, demand for water should hold up extremely well, even during the worst recessions.
Therefore, young investors with a longer time horizon such as Millennials should consider water stocks. These factors make water stocks appealing for risk-averse investors looking for stability from their stock investments.
Not all the water stocks on this list receive buy recommendations at this time, as some appear to be overvalued today. But all the water stocks on this list pay dividends and are likely to increase their dividends for many years in the future.
Additional Resources
At Sure Dividend, we often advocate for investing in companies with a high probability of increasing their dividends each and every year.
If that strategy appeals to you, it may be useful to browse through the following databases of dividend growth stocks:
- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 54 stocks with 50+ years of consecutive dividend increases.
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: