Aqua America Inc (WTRG 1.88%) reported its first-quarter results after the closing bell on Tuesday. The water utility beat analysts' consensus expectations thanks to strong income growth. That growth isn't expected to dry up as the company has been very active on the acquisition market, and it has a pipeline full of future acquisition opportunities.

A look at the numbers
Aqua America reported revenue of $190.3 million, which was 4.2% higher than the first quarter of last year. Revenue was also about $500,000 higher than analysts were expecting. Even better, net income growth was stronger as it was up 13.3%, to $48.5 million. That equated to $0.27 per share, which was $0.03 higher than the first quarter of last year, and $0.01 better than analysts were expecting.

Driving the company's profitability was the fact that its operations and maintenance expenses were up only a modest 2.1% over the prior year, to $73.2 million. This was despite the fact that another rough winter caused an abnormally high number of water-main breaks.

To minimize this problem, and emergency maintenance in general, the company continues to invest money into its systems to lead to more efficient operations. This past quarter, it spent $70.3 million on infrastructure improvements as part of a three-year, $1 billion capital-investment program to improve the reliability of its systems.

Just as reliable as its systems is the company's dividend, which was just declared a couple of weeks ago. While that payout was in line with the previous rate, it's up 8.6% over the prior year's dividend. Further, Aqua America has paid dividends for the last 70 years, and has raised its payout 23 straight years.

A look ahead
Aqua America's dividend will likely head higher in the future as the company continues to move forward with its growth-by-acquisition strategy. So far this year, the company has completed four acquisitions, and it expects to be even more active as the year continues with expectations to complete 15 to 20 deals this year. Those deals could grow its customer count by 1.5%-2%, which would be its greatest customer growth since 2008.

The largest recent deal closed after the quarter ended, when Aqua America acquired North Maine Utilities in Illinois for $22 million, which was the company's largest deal in 16 years. The water and wastewater system serves more than 44,000 people. In addition to that, the company completed another municipal acquisition in Pennsylvania as it bought the Mt. Jewett drinking-water system for $1.3 million. The company also completed two smaller water-system acquisitions, with one in Virginia and another in New Jersey.

Investor takeaway
Aqua America reported a very solid quarter and beat expectations. The company did a good job keeping its costs down, which allowed its income to grow much faster than revenue. This bodes well for its future, as the company expects 2015 to be a busy year. It has already made four acquisitions, and has a number of other deals in the pipeline. This acquisition-driven growth should drive bottom-line growth, suggesting that the company's dividend will likely keep going higher.