Aqua America Hikes Dividend 28th Time, Keeps Streak Alive

Aqua America Inc.’s WTR board of directors approved 7% increase in the quarterly dividend rate. The revised dividend of 21.9 cents will be payable on Sep 1, 2018, to shareholders of record at the close of business as of Aug 17.

The annualized dividend rate of the company amounts to 87.6 cents while the current dividend yield is 2.4%, better than the industry’s 2.08% and the S&P 500 index’s 1.78%.

History of Dividend Payment

The company has been rewarding shareholders with dividend payments for 73 years now.

The current hike marks the 28th dividend increase in the last 27 years.

Can Aqua America Continue to Pay Dividend

Aqua America has regulated operation and aims to invest excess $500 million in 2018, which is part of an investment target of more than $1.4 billion in the 2018-2020 time frame. The U.S. water infrastructure is aging and requires regular investment. Spending allocated toward the upgrade and strengthening of the water assets can be recouped through rate hikes, which will boost earnings of regulated utilities like Aqua America and enable to pay dividend.

The company is also making strategic acquisitions and partnerships to expand customer base. In 2017, the company added 10,854 new connections through organic growth and acquisitions and is planning to add 16,325 new connections in 2018. Recently, the company entered into an agreement to buy the wastewater assets of Village of Manteno, IL. Expansion of operation through acquisition will also increase earnings of the company and help it pay dividend to shareholders.

Price Movement

In the last 12 months, Aqua America’s shares have returned 9.5% against the industry’s decline of 0.2%.

Zacks Rank & Key Picks

Aqua America carries a Zacks Rank #3 (Hold).

Investors can consider a few better-ranked stocks from the same sectorsuch as American Water Works AWK, Ameren Corp. AEE and Algonquin Power & Utilities Corp. AQN. American Water and Ameren hold a Zacks Rank of 2 (Buy). Algonquin Power & Utilities sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

American Water pulled off an average four-quarter positive earnings surprise of 0.77%. The consensus estimate for 2018 EPS has moved up by a penny in the last 90 days to $3.27.

Ameren came up with an average four-quarter earnings surprise of 7.69%. The Zacks Consensus Estimate for 2018 EPS inched up by 0.7% in the last 90 days to $3.05.

Algonquin Power & Utilities delivered an average four-quarter earnings beat of 28.56%. The consensus mark for 2018 bottom line has been revised 15.8% upward in the last 90 days to 0.66 cents.

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