California Water Service: An Overvalued Dividend King

Seeking AlphaDividend Ideas | Utilities California Water Service: An Overvalued Dividend KingNov. 25, 2020 10:29 PM ET|| About: California Water Service Group (CWT), Includes: ARTNA, AWK, AWR, GWRS, MSEX, SJW, WTRG, YORWby: Dividend PowerDividend Power Long-term horizon, Dividend Growth Investing, Growth, Long OnlyDividend Power.cls-1{fill:#024999;}SummaryCalifornia Water Service Group is a Dividend King with 53 years of consecutive annual dividend growth.
The company operates in a regulated industry and grows organically and through acquisitions.
The stock has a negative beta, meaning that it is inversely correlated with the broader market.
The stock is overvalued at the moment.
California Water Service Group (CWT) is a Dividend King that has a 53-year history of annually raising the dividend. In general, I like water utilities. They have stable earnings and cash flow since their product -water and wastewater treatment - is in demand. Population growth tends to produce low single-digit growth in the top and bottom lines each year. The stocks have negative or at least very low correlation with the broader market. This means water utilities provide ballast for portfolios in down markets. That said, investors have discovered water utilities. California Water is no exception, and despite being a Dividend King, the stock is overvalued. However, at the right price I would strongly consider California Water. I am neutral on this stock at the moment.
Source: California Water Service Group
Overview of California Water Service Group
California Water was founded in 1926. The company is the second largest publicly traded water utility in the U.S. The company operates through four subsidiaries that are California Water Service (Cal Water), Hawaii Water Service (Hawaii Water), New Mexico Water Service (New Mexico Water), and Washington Water Service (Washington Water). California Water serves over two million people in 100 communities. Cal Water has about 484,900... Read more