The board of directors of the water utility
Aqua America Inc.
) approved an increase in the quarterly dividend rate by 1.5
cents or 9%. The revised quarterly dividend of 19 cents will be
payable on Sep 1, 2013, to shareholders of record at the close of
business on Aug 16, 2013.
The revised annualized dividend rate comes to 76 cents, with an
annual dividend yield of 2.4%. The increase in distributable
income speaks of the company's successfully executed investment
Previously, the company raised the quarterly dividend rate by
6.1% to 17.5 cents. Aqua America aims at a dividend payout ratio
in the range of 60% to 70%. The dividend increases would help the
company achieve the payout target.
In addition to increasing the quarterly dividend rate, the board
of Aqua America also approved a 5-for-4 stock split. Aqua America
Inc.'s share price moved up 45.3% in the last twelve months,
closing at $31.80 at the end of the trading session on May 9,
2013. The stock split will be effective from Sep 1, 2013
and we believe it will allow more investors to invest in this
Aqua America's cash flow from operating activities at the end of
the first quarter of 2013 was $88.9 million versus $77.9 million
in the comparable period last year. In the first quarter the
company utilized $24.5 million for dividend payouts. The
consistent cash flow generation will enable the company to meet
its increased dividend payment obligation.
Besides Aqua America Inc., a few other water utility operators
have also raised their quarterly dividend rates in recent months.
Artesian Resources Corporation
) raised its quarterly dividend rate by 1.5%,
American Water Works Company, Inc.
) raised its quarterly dividend rate by 12%.
Aqua America currently has a Zacks Rank #3 (Hold) and is
distributing dividends for more than six decades. We prefer
another water utility
American States Water Company
) presently holding a Zacks Rank #1(Strong Buy). AWR too has a
history of paying dividends for six long decades with the current
quarterly rate at 35.5 cents.
ARTESIAN RES (ARTNA): Free Stock Analysis
AMER WATER WORK (AWK): Free Stock Analysis
AMER STATES WTR (AWR): Free Stock Analysis
AQUA AMER INC (WTR): Free Stock Analysis
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