York Water (YORW) Rewards Investors With 4% Dividend Hike

The York Water Company (NASDAQ:YORW) stuck to its habit of dividend hikes, with the board of directors now approving a 4% increase in quarterly dividend. The new dividend of 16.66 cents will be paid on Jan 16, 2018 to the shareholders of record as of Dec 29, 2017.

The annual dividend will be 66.64 cents, reflecting a yield of 1.85%, marginally higher than the S&P 500’s 1.82% yield.

Long History of Dividend Payment

The York Water Company has been rewarding its shareholders with payouts for more than 200 years now, arguably boasting the longest record of regular dividend payment to its stockholders.

The current dividend hike is the twenty-first consecutive year of dividend raise announced by the company.

Factors Behind Regular Payment

The company is steadily expanding its water and wastewater/drainage services through acquisitions and organic means. This expansion of operation is leading to an increase in customer base and resulting in higher demand for water and wastewater services.

The company continues to upgrade and replace nearly 1% of its existing water pipes each year, ensuring quality services to its customers. Plus, addition of new assets like pumping station will help the company serve its expanding clientele in a more efficient and effective manner.

The above initiatives from the company are the primary reasons behind its steady performance and this in turn helps generate adequate funds for the company to offer regular dividends.

Other Moves to Increase Value

The York Water Company apart from making regular dividend payments, also initiated a share repurchase program to increase the shareholder value.

In 2013, the company initiated a program to buy back up to 1,200,000 shares of the company’s common stock from time to time. The company made repurchases and as of Dec 31, 2016, only 655,233 shares remained available for repurchase/under the repurchase authorization.

Investment to Upgrade Aging Infrastructure

The U.S. water infrastructure in getting quite old and hence, massive investment is required to upgrade the existing water and wastewater/sewerage systems. Some of the water mains are nearly a century old and require immediate replacement. Lump sum investment in billions is required for the purpose. The York Water Company has plans to invest $24.8 million in 2017 and already $20.6 million has been pumped in during the first nine months of 2017 to upgrade its existing water systems.

Water utility American Water Works (NYSE:AWK) aims to invest $6.7-$7.3 billion from 2017 through 2021, which will help it boost earnings by 7-10% per year in the period from the 2015 base. In the first nine months of 2017, the company invested more than $1 billion, a hefty chunk of which, was resourced to strengthen operation of its regulated business.

Water Utility Connecticut Water Service Inc. (NASDAQ:CTWS) aims to invest more than $150 million in the 2017-2019 period to consolidate its existing infrastructure. Aqua America Inc. (NYSE:WTR) has plans to make capital investments of more than $450 million in 2017 as part of an ambitious investment target of more than $1.2 billion in the 2017-2019 period.

Price Movement

Shares of The York Water Company have outperformed the Zacks Water Supply industry in the last three years. The stock has soared 75% compared with the industry’s surge of 55.1%.

The company’s steady performance and its long history of quarterly dividend payment look to drive the shares higher.

Zacks Rank

The York Water Company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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