Many investors want to pick sexy stocks that grab the headlines. Many times these stocks soar only to quickly burn themselves out. When that happens, some traders simply move on to the next highflier.

I tend to prefer the opposite, those companies that largely go unnoticed, but put in a yeoman's effort of steadily growing over the years. More often than not, these stocks are also dividend payers, arguably making up for their lack of flash with a generous income stream that also grows over time.

American States Water (AWR -0.10%) is one of those businesses. It's been around for nearly 100 years, has paid a dividend for 86 of them, raised the payout for 68 straight years, and for the past decade has seen its total return more than quadruple in value, far outstripping the mere tripling of the S&P 500.

Here's why this water utility should be a no-brainer stock for any portfolio.

A person drinking a bottle of water.

Image source: Getty Images.

Good to the last drop

Utilities, of course, are favorites for dividend investors because of the stability of their operations and the reliability of their income streams. American States Water is one of the premier utilities in the country, offering clean water and electricity to Southern California along with providing water to and waste collection from 11 military bases under 50-year contracts with the U.S. government.

Being a regulated water utility, though, is its primary business as it generates around 70% of its revenue. Yet arguably more notable than its track record of operation is the one it has for raising its dividend, the longest of any company on the market. And yet neither of these is the reason American States Water is a no-brainer stock, though they strengthen the argument.

AWR Dividend Chart

AWR Dividend data by YCharts

Rather, it is the utility's ability to grow earnings over time despite being in an otherwise slow-growth industry. As regulated companies, many utilities consistently receive rate increases from their regulators. This ensures that utilities continue to serve all customers and earn a reasonable profit, even as business conditions change.

Although third-quarter earnings per share of $0.69 were $0.07 below last year's results, it is because American Water States has been waiting for the California Board of Public Utilities to approve a rate hike for last year. The utility has been operating under 2021 rates.

Had the rate increase been approved, the utility's earnings would have been $0.17 per share higher, or a dime greater than the year-ago period. It's part of a long history of American States Water's earnings growth.

While revenue has grown 3% annually on a compound basis for the past five years, and dividends have increased nearly 9% a year, earnings have have expanded by almost 10% annually. 

A stock for any season

If approved, the rates would become retroactive to last year, but there is the risk the increase could be denied either in whole or in part. That would certainly be a short-term setback, but over the long haul rate increases to finance maintenance, repair, and even expansion of the utility's infrastructure are necessary. Clean water isn't something that can be trifled with.

That makes water a largely recession-proof business, though regulators can be more considerate of consumers in rate cases when inflation or costs are rising, as the California case seems to suggest.

Still the long-term trend is for consistent, steady growth, and with a superior history of paying a dividend and raising it, American States Water is no-brainer buy. It's the premier Dividend King you can put in your portfolio and then forget about for years and years.