Water: there's nothing else on this great green earth we're willing to pay for that has such an abundant supply. Certainly in the North American context, where we have a relatively great supply, there's a certain predictability to the earnings of water utility companies. But in the emerging markets too, demand for water, sewage and treatment services is exploding. Here we highlight a number of companies that have bubbled up to our attention in this mostly clear, tasteless and colorless field.

IN PICTURES: Eight Ways To Survive A Market Downturn

Water on Both Sides of the Atlantic
We start in France where Veolia Environnement (NYSE:VE) stock pays investors about 5.4% annual dividend and trades for $29.43 (Friday's close). The stock has tremendous momentum behind it, having surged over 50% from 52-week lows of just $19.14 a couple of months ago.

Veolia Environnement is based in Paris, has a market cap of about $14 billion and has separate water, wastewater and environmental services. It operates in over 40 countries worldwide and employs more than 330,000 people.

Profitable Mid-Atlantic Operators
Closer to home, Middlesex Water Company, (Nasdaq:MSEX) offers a 5% payout and trades with a P/E of just under 17. The company's core business involves commercial and municipal contracts to operate both water and wastewater systems in New Jersey and Delaware.

Middlesex Water has been on the move recently, expanding its operations into North Carolina, where it will service a newly built, luxury, single-family home development. Amidst the economic turmoil of 2008, this 100 year old company still found fit to raise its annual dividend.

Artesian Resources Corporation (Nasdaq:ARTNA) also operates in Delaware, distributing and selling water to residential, commercial and governmental customers. The company's stock sells with a trailing P/E multiple of about 16.5 and pays an annual dividend of 4.50%. The stock is up about 20% since its March lows, largely on favorable earnings this quarter.

Artesian grew year-over-year quarterly revenues by 13%, from $12.3 to $13.9 million in 2009.

South Atlantic Powerhouse
Our final stop brings us to the sunny shores of Brazil, an emerging market powerhouse, where Companhia de Saneamento Basico do Estado de Sao Paulo (NYSE:SBS) provides water and sewage service to 366 municipalities in the state of Sao Paulo, including the city of Sao Paulo. Sao Paulo is one of the world's largest cities and servicing its water needs – particularly those of its substantial poor cohort – is no easy feat.

SBS has a market cap of $3.6 billion, trades with a P/E of slightly over 7 and has appreciated in value by a remarkable 125% from its 52-week low. The company recently announced it would pay dividends to shareholders in 2010 (those of record as of May 28, 2009).

The Wrap
The whole world over, people are still drinking clean water and looking for ways to dispose of the dirty stuff. That's not likely to change. For those companies who can efficiently service new and existing clientele, there are big gulps of profits to be had. (For more, take a look at Water: The Ultimate Commodity.)

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  3. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  4. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  5. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  6. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  7. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  8. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
  9. Mutual Funds & ETFs

    3 Vanguard Equity Fund Underperformers

    Discover three funds from Vanguard Group that consistently underperform their indexes. Learn how consistent most Vanguard low-fee funds are at matching their indexes.
  10. Investing News

    Alphabet Earnings Beat Expectations (GOOGL, AAPL)

    Alphabet's earnings crush analysts' expectations; now bigger than Apple?
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center