Water Investment Ideas

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Essential Utilities (WTRG) - >>> Essential Utilities, formerly known as Aqua America, is a water and natural gas utility that serves about 5 million people under the Aqua and Peoples brands.

The company started as a utility in southeastern Pennsylvania and has grown into a presence across 10 states. It focuses on regulated water and wastewater, along with other utilities. In 2020, it entered the natural gas business by acquiring Peoples Natural Gas company, giving it 750,000 gas utility customers in three states.

Two-thirds of Essential Utilities' revenue now comes from water, with the remaining one-third from natural gas. The company is focused on growing in areas where it has a critical mass of operations to gain scale and increase efficiency.

Residential water companies have historically increased revenue by about 1% per year -- a reminder that utilities tend to be a slow-growth industry -- but rising rates helped, and acquisitions, including the natural gas business, helped drive revenue up 28% in 2021 to $1.88 billion. The company is also highly profitable, with a profit margin of 23%.

Essential Utilities currently pays a 2.2% dividend yield and has a long history of raising its dividend.

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