Dividend Stocks To Quench Your Thirst

There is no question that, along with population increases around the world, global demand for fresh water will rise exponentially. It is often said that many border disputes and future wars will be fought, not for oil, rather for a clean and reliable water supply. Factor in population increases, aging infrastructure, increased demand from agricultural applications and contamination issues and you are looking at a potential opportunity and windfall for water related companies to take advantage.

There are many companies in the water resources space with several of them paying long time and increasing dividends. The following companies featured will focus on three distinct segments of the water resources sector including, water treatment, water technology and irrigation.

Water Treatment

First up is a stock that I’m sure will get the high yield dividend bloggers excited, Veolia Environnement S.A. (VE). VE operates in three distinct segments one of which deals with drinking water and wastewater management, water distribution, water and wastewater treatment and manufacturing of water treatment equipment. VE currently offers a very high yield of 4.90% which is currently not covered by cash flow as its earning per share for the last twelve months is $-0.40. Still, if looking for a short term high yield play VE might be a reasonable option.

Next in the water treatment space is Ecolab Inc. (ECL). ECL provides water technologies and water treatment needs for the petroleum industry in both upstream and downstream applications. ECL currently yields just 1.00% but has an equally low payout ratio of only 31.1% making the current dividend safe. Another selling point for ECL is its long history of dividend growth going back 28 years. In fact, ECL has an annualized dividend growth rate for the last ten years at a very healthy 12.45%. On a valuation basis it seems that the share price of ECL has run way ahead of its earnings as the PE stands at 33.4, well above the S&P and industry peers. Despite the high current PE, ECL definitely has the characteristics of a great dividend growth stock.

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Disclosure: Long NONE

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