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.
Why should you consider investing in water stocks?
There are a number of reasons to invest in water stocks. Let's take a look at a few of them.
- Water's essential nature means it will always be in demand and have a variety of applications.
- Water is a key input in everything from food and beverages to the cleaning of semiconductor wafers and hydraulic fracturing (fracking).
- Climate change is making water scarcer, driving up its value as well as innovative solutions to expand access to drinking water.
- Desalination, already used in tropical islands, is a growth opportunity in the water industry.
- Most water stocks are utilities, meaning they tend to be safe, recession-proof stocks.
Law of Supply and Demand
Top seven water stocks in 2025
1. American Water Works
NYSE: AWK
Key Data Points
American Water Works may provide one of the best examples of how boring stocks can quietly beat the market. Founded in 1886, the water utility went public at $21.50 a share in May 2008 and was hovering around $130 a share in August 2025; its return is even higher with dividends reinvested.
American Water Works is the country's largest water utility stock. Like other utilities, it benefits from being a regulated monopoly, so 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, and it's mostly traded sideways in 2025
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 2.6% yield, as of August 2025.
2. York Water Company
NASDAQ: YORW
Key Data Points
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. Since 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 2024, or 212,000 people.
Its 2024 revenue increased 4% to $75 million, and the company is also highly profitable, with an operating margin of 37% in 2024.
York Water pays a dividend yield of 2.7%, and its payout ratio is around 60%, meaning that investors can count on a continuing dividend. It's also paid 619 consecutive quarterly dividends, which is believed to be the record for any U.S. company.
3. Essential Utilities
NYSE: WTRG
Key Data Points
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 offers a 3.4% dividend yield and has a long history of raising its dividend.
4. American States Water Company
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 2024, 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 2024. 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 have grown 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 2.6% as of November 2025.
5. Middlesex Water Company
NASDAQ: MSEX
Key Data Points
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, and net income jumped 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. In November 2025, Middlesex posted a 2.7% dividend yield. It has a payout ratio of about 60%, so it should be able to easily increase its dividend in the coming years.
6. Xylem
NYSE: XYL
Key Data Points
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 paid a 1.1% dividend yield in November 2025.
7. Primo Brands Corporation
NYSE: PRMB
Key Data Points
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 2024 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 20%, 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.
Factors to consider when choosing water stocks
Not all water stocks are created equal. Let's review some things to consider before you make a purchase.
- Understand the business model. While most water stocks are utilities, not all are, and some also own other types of utilities.
- Dividend yield. Most water stocks offer some kind of dividend. It's a good idea to compare yields, payout ratios, and dividend growth history. For most investors, a reliable and growing dividend is a major reason to invest in water stocks.
- Growth potential. Most water stocks are slow-growth companies, but some have been more aggressive with acquisitions than others. Similarly, some have more exposure to growth markets or new technologies than others.
How to invest in water stocks
If you're interested in buying water stocks, the process is the same as it would be for buying any stocks. Just follow the steps below.
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Is investing in water stocks right for you?
Water stocks have had an average 2025 through November, but most of these stocks have outperformed the S&P 500 index over the past decade. During one of the greatest bull market runs in stock market history, that's an impressive feat for a group of dividend-paying, recession-proof stocks in what's seen as the relatively safe and sleepy utilities industry.
With this track record, diversifying your portfolio with some water stocks looks like a smart move, especially given their position as a possible hedge against climate change.
FAQ
About the Author
