This Company Has Raised Its Dividend for 72 Straight Years. Almost Nobody Talks About It.
Key Points
Most investors have probably never heard of American States Water.
The sleepy water utility is an elite dividend growth stock.
- 10 stocks we like better than American States Water ›
American States Water (NYSE: AWR) rather quietly raised its dividend by 8.2% last month. This pay bump extended its dividend growth streak to an impressive 72 straight years. That kept its name at the top of the Dividend Kings list as it remains one of fewer than 60 companies with 50 or more years of annual dividend increases. The sleepy water utility has now paid 361 consecutive quarterly dividends.
Here's why more investors should be talking about this boring utility stock.
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Small, but mighty
American States Water doesn't have the name recognition of other Dividend Kings, like Coca-Cola or Johnson & Johnson, because it's not an iconic consumer brand. Instead, it's easily confused with another water utility, American Water Works, which is the largest regulated water and wastewater utility in the country with over 14 million customers across 14 states.
American States Water, on the other hand, has 1 million customers in 10 states. It operates two utilities, Golden State Water Company and Bear Valley Electric Services, which provide regulated water and electricity services to customers in California. It also owns American States Utility Services, which operates and maintains water distribution, wastewater collection, and treatment facilities at 12 military bases under long-term contracts. Those boring businesses generate very stable cash flow.
The utility grows by investing capital to support rising water and power demand among its customers, enabling it to file for rate increases that regulators approve. It's regulated utilities plan to invest $185 million to $220 million this year to support continued demand growth. Additionally, American States Water will acquire new water systems. For example, it agreed to buy a new water system in California for almost $5.3 million earlier this year. These investments help drive steady earnings growth.
American States Water has grown its dividend at an 8.7% compound annual rate over the last decade. That has helped drive a 10.4% annualized total return. With a current yield of roughly 2.5%, a target of more than 7% compound annual dividend growth, and a 72-year dividend growth track record, American States Water is a stock that more investors should be talking about.
Should you buy stock in American States Water right now?
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Matt DiLallo has positions in Coca-Cola and Johnson & Johnson. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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