Dividend Kings In Focus: California Water Service Group

Water is one of the basic necessities of human life. This simple fact provides for just about the most secure business model one can find—water utilities.

Even in the direst of economic climates, people simply cannot live without water. This is why so many publicly-traded water utilities have paid—and raised—their dividends for decades on end.

For example, California Water Service Group (CWT) has paid 288 consecutive quarterly dividends, a streak that amounts to 72 years. And, it recently increased its shareholder dividend for the 50th year in a row.

This landmark accomplishment vaults CWT into the rarified air of the Dividend Kings, a select group of companies with 50+ years of consecutive dividend increases.

With the inclusion of CWT, there are now just 19 Dividend Kings. You can see the entire list of Dividend Kings here.

This article will discuss CWT’s business model, future growth prospects, and valuation of the stock.

Business Overview

CWT is the third-largest publicly-traded water utility in the U.S. The company has six wholly-owned subsidiaries, which provide water in California, Washington, New Mexico, and Hawaii.

Four of the six subsidiaries are regulated by their respective state public utilities commissions. The company also has non-regulated operations in water utility and wastewater systems, and related services.

CWT currently has more than 500,000 customers, and generates more than $400 million in annual revenue.

Over the course of 2016, CWT’s earnings-per-share were pressured by higher interest expense, and various non-recurring cost items.

CWT EPS

Source: Third Quarter Earnings Presentation, page 8

Still, the company remained highly profitable throughout the year. The company generated earnings-per-share of $0.70 during the first three quarters of 2016. Earnings-per-share sufficiently covered its dividends of $0.54 per share in the same nine-month period.

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Disclosure: 

Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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