We have received $55.47 (289.9634 shares x 19.13 cents) from Aqua America (WTR). This is the 2nd consecutive payment at 19.13 cents. We are expecting in the next 2 quarters to receive dividends of at least 19.13 cents. Founded in 1968, Aqua America Inc (WTR) provides water or wastewater services in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana and Virginia. Since the early 90’s, the company has been increasing its dividends.
The dividend yield is at 2.4%. Since mid-2016, the dividend yield has an increasing trend and it seems that its momentum shall be in the range of 2.5%. In 2014 to the last quarter of 2015, 2.5% was the momentum of Aqua Water so we may see such similar trend for 2017.
The dividend payout ratio has an increasing trend too after dropping to below 0.55 in 2013 and 2014. The current dividend payout ratio is 0.60 but still below to its peak in 2010 based on the 10 yrs trend. Despite an increasing dividend payout ratio, which may slash the future growth of dividend payments, we are still comfortable that dividend payments from Aqua America (ATR) will still continue.
As explained earlier, a low dividend yield and a bit high dividend payout ratio might seem for Aqua America (WTR) to either halt paying dividends or have a sluggish dividend growth; however, we are confident that there will still be an increase in dividends because (1) the mere fact that it has been continuously increasing its dividend for many decades (investors will not like it if it will abruptly stop paying dividends) and (2) after analyzing dividend yield and dividend payout ratio, there is still growth based on the historical dividend growth rates.
No matter how low the dividend yield or an increasing dividend payout ratio is being indicated, the company has been committed in increasing the dividends annually between +7.5% to +8.5% so we are comfortable that the next increase in dividends will be at least in the +7% range, which isn’t bad.
This is a great company and we’re glad the Q-score picked it for our portfolio.