Like its competitors, Aqua has grown steadily through the years via acquisitions. However, of late, it has been looking to rationalize its portfolio to focus on the areas in which it has economies of scale. As such, it sold operations in Maine and New York and bought operations in Ohio in 2012. It is looking to get out of Florida and Georgia.
Such transactions can lead to a little variability on the top and bottom lines, but are good for the company’s long-term prospects. Still, the company’s revenue and earnings have headed roughly higher for a decade. One area, however, that hasn’t changed much is the dividend. The company keeps increasing it on an annual basis.
A beta of less than 0.5 and a steadily increasing dividend should provide solid comfort in volatile markets. The yield of around 2.40% isn’t all that exciting, but isn’t outlandishly low compared to its peers.
A little fish
American States Water Co (NYSE:AWR) is the smallest company here with a market cap of just about $1 billion. The company’s business is more concentrated geographically, serving 75 communities in ten California counties. However, it is more diversified in that the company also distributes electricity (about 8% of the top line). And, like some competitors, it has a division that provides water services to military bases (about 27% of the top line).
The company is pretty small, with the water and electric divisions growing slowly over time. However, the services arm has been a key growth driver, increasing its revenue from $72 million in 2010 to $124 million last year. This growth led to a 15% dividend hike last year and the late May announcement of a 14% increase. The company brags of over 50 years worth of dividend hikes. Not bad for a tiny company tightly focused on California.
With a beta of less than 0.5 and a yield of around 3%, this might be the best option of the trio for income investors.
Utility sell off
Water utilities have sold off with the broader utility sector. That however, make now a great time to jump aboard these relatively boring stocks. Yield seekers won’t find them compelling, but those in search of stable businesses with products that are vital necessities couldn’t find a better collection of stocks to consider.
The article Volatility Will Rise, Avoid It With These Stocks originally appeared on Fool.com.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Aqua America. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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