Dividend aristocrat American States Water is a ‘Buy’

Selling snow to Eskimos has always been a whimsical benchmark for successful sales reps here in the Great White North. But, selling water to Californians? Creating demand is certainly not a problem in a drought. Supply and efficient distribution networks are. This long time dividend paying stock has both.

We’ve added top dividend paying stock American States Water Co. (NYSE─AWR) to our list of U.S. all-star stocks. It supplies water to 258,191 customers in Southern California. True, it’s suffering a drought. But American States Water has a valuable water rights portfolio and a capital program to replace aging infrastructure.

Also, the company supplies electricity to 23,716 customers. This diversification can stabilize its financial results. It has performed well over many years.

American States Water is what’s known as a ‘dividend aristocrat’. In the U.S., that’s a company that has raised its dividend for at least 25 years in a row. American States Water greatly exceeds this threshold. Indeed, it has raised its dividend for 61 consecutive years.

American States Water now pays dividends of 90 cents a share. That’s up significantly from the 52 cents a share that it paid in 2010. Over the past five years, the company’s dividend has grown at an average yearly compound rate of 11.6 per cent. We expect it to continue to raise its dividend in the years ahead.

American States Water earns more money most years. In 2015, it’s expected to earn $1.60 a share. That’s marginally less than its peak earnings of $1.61 a share in 2013. Looking back a dozen years, however, its earnings rose in 10 years and slipped in only two. Despite last year’s decline, its earnings per share have climbed at an average yearly compound rate of 7.6 per cent over the latest five years.

American States Water also generates higher revenue most years. In 2015, it’s expected to generate $470 million. True, this is down a little from record revenue of $472.1 million in 2013. But over the past decade, that was the only year that the company’s revenue slipped. Over the past five years, its revenue has risen at an average yearly compound rate of 3.3 per cent.

Buy American States Water for long-term share price gains and decent dividends that rise year after year.

 

The Investment Reporter, MPL Communications Inc.
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