3 Defensive Water Stocks To Quench Investor Thirst For Robust Yields

by: Mitchell Harris

The environmentalists say the earth is running out of clean water. In fact,only about 3% of the total volume of Earth's water is "fresh". Over a billion people on Earth lack the ability to receive clean drinking water. This is due to global climate changes, contamination, drought, and poor sewage systems, among other reasons.

I have always liked water; simple, clean, healthy, and refreshing. I researched a few companies that throw off an attractive yield and have performed rather well in this disaster of a market. Maybe these 3 stocks will even douse some of the fires that have popped up in your portfolio:

Artesian Resources Corporation--(NASDAQ:ARTNA) through its subsidiaries, provides water, wastewater, and engineering services on the Delmarva Peninsula. It distributes and sells water to residential, commercial, industrial, municipal, and utility customers in the states of Delaware, Maryland, and Pennsylvania. The company also offers water for public and private fire protection to customers in its service territories. The stock is currently at $17.95, off its 52 week high of $20. It's not a well known company or a large cap, but it's solid, boasting a 4.3% dividend, and a PE of 22. The company's recent earnings were basically flat, due to record rainfall in the region. Their water and sewer lines protection program segment continues to grow, as aging pipes and other infrastructure need replacing. The company has been around since 1905 so they obviously have staying power. ARTNA is not going to wow you with ridiculous returns, but from 2009 thru now it has gone from $13 to $18 and paid nice yields.

Consolidated Water Co. Ltd--(NASDAQ:CWCO) through its subsidiaries, develops and operates seawater desalination plants and water distribution systems. The company uses reverse osmosis technology to produce fresh water from seawater. It processes and supplies water to end-users, including residential, commercial, and government customers; and distributors and commercial suppliers, which include governments and wholesalers in the Cayman Islands, the British Virgin Islands, Bermuda, Belize, and the Bahamas. I like the fact that it's treating water outside of the USA, which lets you diversify a bit. Current price is $8.30 down about 11% in the past 52 weeks, while yielding 3.5%. Their earnings report from a few weeks back showed a 10% increase in revenues and a 122% increase in operating income. Here is the best part: They have $49 million in cash which represents $3.37 per share.

The York Water Company--(NASDAQ:YORW) engages in impounding, purifying, and distributing drinking water in Pennsylvania. It has two reservoirs, Lake Williams and Lake Redman, which together hold up to approximately 2.2 billion gallons of water. The company also has a 15-mile pipeline from the Susquehanna River to Lake Redman that provides access to an additional supply of 12.0 million gallons of water per day. In the past 2 years the stock has gone from $13 to $17, and is currently paying 3.1%. Earnings were up 6% for the quarter to $31 million, with net income of $7 million. This was due to higher water revenues along with a recent price increase. I like the fact that they spent $10 million on capital projects and upgrades to current systems, as well as expansion and improvements in pipe technology. It's important to invest back into infrastructure, especially in this industry.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.