On Monday, the largest publicly traded water utility in the United States, Aqua America
Tuesday's announcement of a 9% dividend increase, however, seemed to draw higher acclaim from investors, as the stock traded 2% higher for the day. The dividend increase is the 17th hike for the company in the past 16 years, and also boosts the current annualized yield to 2.1%.
Drowning out the competition
Aqua America has had an insatiable appetite for gobbling up water and wastewater systems in recent years. In 2006 alone, the company added 28 such systems to its bullpen and expects to add at least 20 more in 2007. Indeed, the aggressive acquisition strategy has been the backbone of the company's growth story for some time now.
With demand for clean water and sanitation services growing all over the world, both U.S.-based water utilities like Aqua America, California Water
That said, long-term Aqua America investors should pay close attention to the effectiveness of the company's acquisition strategy over the next few years. Improving results will need to be displayed if the stock price is to justify its lofty valuation, with its PEG ratio currently above 3.
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