Water Investment Ideas

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Xylem (XYL) - >>> Xylem isn't a water utility but a water technology company. It makes a wide range of products to handle the transportation and treatment of water, pumping and heating, and measurement for meters and data analytics.

With a unique business model, Xylem has no single competitor, but it competes against a wide array of companies across its three business segments. It estimates its total served market to be $60 billion in the segments within a larger addressable market of $600 billion in the global water industry.

The company sees opportunities in emerging markets as clean water becomes more accessible through technological innovation.

Xylem's 2020 performance was affected by COVID-19 as revenue fell 7% to $4.9 billion, but the company returned to growth in 2021, up 7% to $5.2 billion, or 4% organic growth.

Historically, Xylem has been solidly profitable, although its profits have fluctuated. Earnings per share peaked in 2018 at $3.03 and fell to $1.41 in 2020, hammered by the decline in revenue and higher expenses. EPS bounced back to $2.35 as it regained momentum in the pandemic recovery.

Xylem has regularly raised its dividend since its IPO in 2011, and it now pays a 1.4% dividend yield.

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