Investing in Water Stocks

American Water Works may provide one of the best examples of how boring stocks can quietly crush the market. Founded in 1886, the water utility went public at $21.50 a share in 2008 and was hovering around $142 a share in August 2025.

American Water Works is the country's largest water utility stock. Like other utilities, it benefits from being a regulated monopoly, meaning that the company doesn't face competition in the regions where it operates. In exchange, its prices are regulated by state and local governments.

Over the years, American Water Works has grown by investing in its own infrastructure, through acquisitions, and by seizing opportunities in market-based businesses such as its military services group.

The company plans to continue investing in the business, forecasting at least $40 billion in investments, including infrastructure improvements and acquisitions, over the next decade. It also completed 26 acquisitions in 2022, 23 in 2023, and 13 in 2024.

American Water Works' earnings multiple expanded considerably over the decade when interest rates were low, as the low-interest rate environment caused investors to rotate from bonds into dividend stocks and lifted stock market multiples more generally. After slumping through 2022 and 2023, the stock regained some of those losses in 2024 as the Federal Reserve began to cut interest rates.

It's worth keeping an eye on interest rates, but the company's size gives it an advantage in scalability and in making acquisitions. It paid a quarterly dividend of $3.31, or a 2.3% yield, as of August 2025. 

2. York Water Company

York Water Company, founded in 1816, is the oldest investor-owned water utility in the U.S. The company sources, purifies, and distributes drinking water within three counties in south-central Pennsylvania. It also owns two wastewater collection systems and five wastewater collection and treatment facilities.

Because it's a water utility, York's growth is determined by its number of customers, as well as water and wastewater rates. Because it can't directly control prices, the best way for the company to grow is by increasing its customer base.

York Water has made a number of acquisitions in its territory to boost growth, but it operates in a slow-growing part of the country. The company's total customer count increased slightly from 71,411 at the end of 2019 to almost 80,000 households at the end of 2023, or 212,000 people.

Its 2022 revenue increased 6% to $75 million, and the company is also highly profitable, with an operating margin of 37% in 2023.  

York Water pays a dividend yield of 2.9%, and its payout ratio is around 60%, meaning that investors can count on a continuing dividend. It's also paid 618 consecutive quarterly dividends, which is believed to be the record for any U.S. company.

3. Essential Utilities

Essential Utilities, formerly known as Aqua America, is a water and natural gas utility that serves about 5 million people under the Aqua and Peoples brand.

The company started as a utility in southeastern Pennsylvania and has grown into a presence across 10 states. It focuses on regulated water and wastewater, along with other utilities. In 2020, it entered the natural gas business by acquiring Peoples Natural Gas Company, which gave it 750,000 gas utility customers in three states.

About 60% of Essential Utilities' revenue now comes from water, and the rest from natural gas. The company is focused on growing in areas where it has a critical mass of operations to gain scale and increase efficiency.

Residential water companies have historically increased revenue by about 1% per year -- a reminder that utilities tend to be a slow-growth industry -- but rising rates have helped, and acquisitions have given the boost earlier in the decade. In 2024, revenue rose 1.6% to $2.09 billion as growth was slowed in part by divestitures. The company is also solidly profitable, with a net profit margin of 9%.

Essential Utilities currently pays a 3.6% dividend yield and has a long history of raising its dividend.

American States Water Company is a diversified utility company with several subsidiaries and three segments, including water, electric, and contracted services.

As of the end of 2023, the company's regulated utilities had 264,557 water customers and 24,857 electric customers. It also has a number of military contracts.

A majority of its revenue comes from Golden State Water Company, a subsidiary involved in the purchasing, production, and distribution of water in 10 California counties.

Like other utilities, American States Water Company benefits from a lack of competition. However, its growth has been modest in recent years, and revenue was flat at $595.5 million. In 2023, it soared by 21% as the company won approval for rate increases.

American States Water Company has been less acquisitive than other water utilities, although its profits grew steadily from $1.62 per share in 2016 to $3.17 in 2024. The company has kept costs relatively flat even as rates have ticked up.

American States Water has also been a reliable dividend payer, offering a dividend yield of 2.7% as of December 2024.

5. Middlesex Water Company

Middlesex Water Company was founded in 1897 and operates regulated water and wastewater utility systems in New Jersey and Delaware. It has approximately 123,000 customers across the two states.

Middlesex's revenue has grown steadily over the past decade, but revenue jumped 15% to $191.9 million in 2024, due to a rate increase. As a result, profits soared with net income jumping almost 50% to $44.4 million.

Middlesex sees four issues affecting its net income: Weather, rate relief, effective cost management, and customer growth.

The company has been a reliable dividend stock over the years and regularly increases its payout. As of December 2024, Middlesex paid a 2.6% dividend yield. It has a payout ratio of about 60%, meaning that it should be able to easily increase its dividend in the coming years.

Xylem isn't a water utility but a water technology company. It makes a wide range of products to handle the transportation and treatment of water, pumping and heating, and measurement for meters and data analytics.

With a unique business model, Xylem has no single competitor, but it competes against a wide array of companies across its three business segments. It estimates its total served market to be $60 billion in the segments it operates -- about 10% of a larger addressable market of $600 billion in the global water industry.

The company sees opportunities in emerging markets as clean water becomes more accessible through technological innovation.

Xylem's revenue rose 16% in 2024 to $8.6 billion, boosted by its acquisition of Evoqua Water Technologies. Evoqua provides water treatment solutions, creating an industry leader.

Historically, Xylem has been solidly profitable, although its profits have fluctuated. Earnings per share rose 13% on an adjusted basis to $4.27 in 2024.

Xylem has regularly raised its dividend since its initial public offering (IPO) in 2011, and it now pays a 1.1% dividend yield.

7. Primo Brands Corporation

The Primo Water brand may be best known for its exchangeable water tanks, available at big-box stores, but the current Primo Brands is the result of two mergers. First, beverage company Cott Corporation acquired Primo Water in March 2020. Cott sold its coffee and tea business and rebranded as Primo Water to become a pure-play water company. Then, in November 2024, Primo Water and BlueTrition Brands merged, creating a beverage company focused on healthy hydration. In addition to Primo Water, it also includes brands like Poland Spring, Pure Life, and Saratoga.

Primo Water grew its revenue by 10% in 2023 to $5.2 billion, with a boost at the end of the year from the merger.

On an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis, the company's margins are about 25%, and its generally accepted accounting principles (GAAP) profit is closer to breakeven because of its heavy debt burden of about $5 billion.

Still, the company is delivering steady growth and offers investors a unique opportunity as a rare pure-play water consumption stock. 

Water may be a commodity that you don't think about when it comes out of the tap, but it's essential to life. Not only that, it's a multibillion-dollar industry in the business world.

6. Xylem