With President Biden’s recent massive proposal and Congressional Republican’s recent counter proposal, infrastructure is the talk of the town. And America certainly does need the help. Our pipes, roads, bridges and telecommunications infrastructures are in serious need of an upgrade. For those firms that own and operate this vital economic backbone, the recent plans to improve this network will prove to be very fruitful indeed.
This includes our utility in the water sector.
Our pick is already one of the largest water utilities in the nation, providing the essential service to millions of Americans. While nothing particularly “exciting” about cleaning and moving fresh, potable water to homes and businesses, it’s a steady niche that provides tons of cash flows and revenues.
With the emphasis on rebuilding our infrastructure, there’s plenty in the various proposals that deal with improving our water systems. This will mean plenty of hefty tax breaks, loan guarantees, and grants for our pick. All of that translates into a direct boost to its bottom line. When utilities make improvements, they can often request rate increases from local and state governments.
Meanwhile, the re-opening of the economy has slowly started to increase water demand as more businesses and consumers venture out into the real world and offices once again. Add in our pick’s hefty dose of unregulated assets and businesses – including plenty of military contracts – and you have a recipe for current and long-term success.
For investors, our utility pick offers a great chance for growth as well as a side of safety. And this is exactly what they should be looking for in this market environment.
To summarize, here are five reasons why you should own this stock:
1. One of the largest water utilities in the nation serving over 47 states!
2. Big winner in the latest push for infrastructure spending, meaning it should benefit from various government programs and grants.
3. Realized a nearly 8% increase in EPS last quarter, which is a very strong result considering the ongoing pandemic.
4. Paid a steady dividend since its IPO in 2008, with its latest increase being nearly 10%!
5. Healthy payout ratio of 57% and growing yield of 1.57%.
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