Regulated US water utility stocks brace for election uncertainty after stellar 2019

摘要

Listed US investor-owned water utilities had an outstanding year in 2019, with the three largest names by market capitalisation rising by between 29% and 38%, despite price-to-earnings multiples in the sector rising to unprecedented highs. While the rise in valuations is to some extent a rational response to the downward trend in US interest rates, the sector's multi-decade track record of delivering solid dividend increases means that investor-owned water utility stocks could continue to rise well beyond their current levels. In October, investment bank Janney Montgomery Scott re-rated its entire coverage universe to reflect this view, arguing that many names have the potential to double their current share prices over the next ten years (see GWI October 2019, p17).