Now that we've welcomed in 2022, we're going to look at the best-performing stocks in the U.S. water utility industry in 2021. (A follow-up article will explore the best stocks in this space to consider buying in 2022. My perennial favorite water utility, industry goliath American Water Works ( AWK 0.82% ), will top that list.)
Select dividend-paying water utility stocks make great core long-term holdings. All utilities provide products and services that are considered essential, which makes them much more immune to economic downturns than most other sectors. But water utilities provide the most essential product of all utilities: potable water for drinking and other uses. And the wastewater services provided by many water utilities are not very far behind on the essential scale.
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Water utility stocks ranked by 2021 performance
The following chart shows how the nine largest U.S. water utility stocks stacked up by performance in 2021. Investors should note that Essential Utilities is far from a water utility pure play. This company is the former Aqua America and changed its name in early 2020 after it acquired Peoples, a sizable natural gas utility serving western Pennsylvania.
Wall Street's Projected 5-Year Annualized EPS Growth
|Middlesex Water ( MSEX 1.10% )||$2.0 billion|
|California Water Service ( CWT 0.60% )||$3.6 billion||1.36%||11.7%||35.1%||359%|
|American States Water ( AWR 1.71% )|
|American Water Works|
|Global Water Resources|
|SJW Group||$2.1 billion||1.93%||5.7%||7.7%||255%|
Data sources: YCharts and Yahoo! Finance. EPS = earnings per share. *Earnings estimates provided by only one or two analysts. **Held its initial public offering in May 2016. Returns that have beaten the S&P 500 are boldfaced. Except for 2021 returns, all data is to Jan. 7, 2022.
Here's a look at 2021's three best-performing water utility stocks.
Middlesex Water owns and operates regulated water and wastewater systems primarily in parts of New Jersey and Delaware. It also has nonregulated businesses in these states that operate water and wastewater systems for municipal and private customers and provide related services. The company serves a population of nearly half a million people.
For the first three quarters of 2021, Middlesex's regulated business contributed 92% of its total revenue, with its nonregulated business chipping in the other 8%.
In 2021, Middlesex boosted its dividend by 6.4%, marking its 49 consecutive year of dividend increases.
California Water Service
California Water Service is the third largest publicly traded water utility in the United States, behind American Water Works and American States Water. It provides regulated and nonregulated water and wastewater services to more than 2 million people in California, Hawaii, New Mexico, Washington, and Texas. In 2020, nearly 91% of its total customer connections were in its namesake state.
For the first three quarters of 2021, more than 97% of California Water's total revenue came from its regulated operations.
In 2021, California Water raised its dividend by 8.2%, marking the 54 consecutive year it's increased its payout to shareholders.
American States provides regulated water services to about 262,000 customer connections in Northern, Coastal, and Southern California. It also provides electric service to about 24,500 customer connections in California's Big Bear Lake region. The company's nonregulated business operates and maintains water and wastewater systems on 11 military bases throughout the country under long-term contracts with the U.S. government.
For the first three quarters of 2021, American States' total revenue was comprised of about 71% regulated water, 7% regulated electricity, and 22% contractual services revenue.
American States Water has raised its dividend for 67 consecutive years, with its 2021 increase a juicy 9%.