Meanwhile, Brazilian water giant Sabesp (SBS) beat them all, soaring 32%:
This all makes sense when you think about it. People always need water, period. That doesn’t change when the broader market is heading south.
Less Than a Penny Per Gallon
Of course, water is essential for sustaining all life on Earth. So, it’s no surprise that water infrastructure, treatment, and transportation companies run very stable businesses.
On top of that, long-term trends like population growth and a shrinking supply of freshwater from rivers, lakes, and aquifers can only push demand—and prices—higher.
However, right now, water in the US is downright cheap. The average price is about $1.50 per 1,000 gallons or less than a penny per gallon.
But you can still make a lot of money off it…
There are 327 million people in the US today. That figure could climb as high as 440 million by 2050.
Meanwhile, Americans use 80 to 100 gallons of water per day, on average. So we need every last drop of water we can find.
This is why the US government is investing heavily in water infrastructure. By 2027, investment in municipal water infrastructure will rise 11%. And private spending on drinking water infrastructure will total $60 billion, according to accounting firm PricewaterhouseCoopers.
Over the next 25 years, total spending on wastewater treatment alone will exceed $10 billion a year.
These steady and predictable investments help make US water stocks some of the safest investments on the market.
The Best Ways to Invest in Water Right Now
There are a handful of ways to invest in water. For income investors like us, the best route is water utilities like American Water Works (AWK) and Consolidated Water Co. (CWCO).
Water infrastructure companies like Xylem (XYL) also offer solid opportunities. Although it has underperformed the S&P 500 and water utilities year to date, it has beaten the market over the last 36 months.
If you prefer the ETF-route, my favorite is the Invesco Water Resources ETF (PHO). It holds everything from utilities to infrastructure companies, and it pays a small 0.5% dividend yield.
That said, I usually prefer buying individual stocks, since they offer more upside. But for investors who want a broad slice of the water market, an ETF is a suitable choice.
Either way, water belongs in every income investors’ portfolio.
The Sin Stock Anomaly: Collect Big, Safe Profits with These 3 Hated Stocks
My brand-new special report tells you everything about profiting from “sin stocks” (gambling, tobacco, and alcohol). These stocks are much safer and do twice as well as other stocks simply because most investors try to avoid them. Claim your free copy.
