7 Best Water Stocks Buys Now | 2023 List Of All 56

Updated on March 8th, 2023 by Bob Ciura

Water is one of the basic necessities of human life. Life as we know it cannot exist without water. For this simple reason, water may be the most valuable commodity on Earth.

It is only natural for investors to consider purchasing water stocks. There are many different companies that can give investors exposure to the water business, such as water utilities. Some other companies are engaged in water purification.

In all, we have compiled a list of over 50 stocks that are in the business of water. The list was derived from five of the top water industry exchange-traded funds:

Invesco Water Resources ETF (PHO)
Invesco S&P Global Water ETF (CGW)
Invesco Global Water ETF (PIO)
First Trust ISE Water Index Fund (FIW)
Ecofin Global Water ESG Fund (EBLU)

You can download a spreadsheet with all 56 water stocks (along with metrics that matter like price-to-earnings ratios and dividend yields) by clicking on the link below:

In addition to the Excel spreadsheet above, this article covers our top 7 water stocks today, that we cover in the Sure Analysis Research Database.

This article will discuss the top 7 water stocks according to their expected returns over the next five years, ranked in order of lowest to highest.

Table of Contents

Water Stock #7: SABESP (SBS)

5-year expected annual returns: 8.3%

SABESP is one of the world’s largest water supply, sewage collecting, and treating companies, serving 28.4 million people. The company operates in a natural monopoly, serving the City of Sao Paulo and 375 out of the 645 municipalities in the state, covering around 70% of its urban population. It has a total water treatment capacity of 81.7 (m³/s) and generates around $3.4 billion in annual revenues.

The Government of Sao Paulo is required by law to have voting control at all times and hence owns 50.3% of SABESP’s share capital. SABESP is based in Sao Paulo, Brazil, and reports its financials in Brazilian Real. All figures in this report have been converted to U.S. dollars.

On November 15th, 2022, SABESP reported its Q3 results for the period ending September 30th, 2022. Revenues came in at $1.11 billion, 16.2% higher year-over-year in constant currency. The increase was driven by: (i) tariff adjustments of 12.8% since May 2022; (ii) a 1.6% increase in billed volume; and (iii) a higher average tariff due to the increase in the billed volume in the non-residential categories.

Earnings per share (ADR) came in at $0.29, a significant increase from last year’s $0.13. While profits were boosted by higher margins amid higher revenues, this result includes a $65.2 million gain in exchange variations on borrowings and financing, which boosted the bottom line.

Click here to download our most recent Sure Analysis report on SABESP (preview of page 1 of 3 shown below):

Water Stock #6: Idex Corporation (IEX)

5-year expected annual returns: 8.5%

The IDEX Corporation (IEX) is a company that sells industrial products worldwide. The business operates through three segments: Fluid & Metering Technology (FMT), Health & Science Technologies (HST), and Fire & Safety/Diversified Products (FDSP).

These segments made up 35.5%, 43.5%, and 21.0% of sales, respectively, for 2022. Inside each of the segments, IDEX owns a series of businesses in niche markets that own highly engineered and proprietary assets.

Source: Investor Presentation

These businesses are generally in fragmented niches in growing markets, and most of their businesses are first or second in their niche markets. This gives the business the advantage of being able to drive high returns on operating capital because each of its individual businesses has a moat. IDEX Corporation was incorporated in 1987 and has 8,500 employees.

On January 31st, 2023, IDEX reported Q4 2022 results for the period ending December 31st, 2022. The company earned $2.01 in adjusted earnings-per-share in the quarter increasing 29.7% from the year-ago quarter’s $1.55. For the quarter, IDEX’s net sales were $810.7 million, reflecting year-over-year growth of 13.4%. Organic sales in the quarter increased 12% year-over-year, higher than 9% growth expected by IEX. Full year 2022 net income increased $137.5 million to $586.9 million, which resulted in adjusted earnings per share of $8.12.

IDEX expects adjusted earnings per share of $1.98 to $2.03 for Q1 2023 and a growth of 3-5% in organic sales compared to the same period in the previous year.

Click here to download our most recent Sure Analysis report on IDEX (preview of page 1 of 3 shown below):

Water Stock #5: American Water Works (AWK)

5-year expected annual returns: 8.5%

American Water Works is the largest and most geographically diverse, publicly traded water and wastewater utility company in the United States, as measured by both operating revenues and population served. The company provides drinking water, wastewater, and other related services to over 15 million people in 46 states.

Its regulated business includes 53,500 miles of pipe, 490 water treatment plants, 175 wastewater facilities, 1110 wells, and 73 dams. The company also provides water and related services to the U.S. government and U.S. military through 17 installations.

The company has a long history of strong returns and dividend increases.

Source: Investor Presentation

On February 15th, 2023, American Water Works reported its Q4-2022 and full-year results for the period ending December 31st, 2022. Revenues declined by 2.1% year-over-year to $931 million. The decline was only due to the disposition of its HOS subsidiary last year.

Excluding this, revenues actually grew $61 million year-over-year, primarily due to authorized revenue increases resulting from completed general rate cases. EPS came in at $0.81 compared to $3.55 last year. The massive decline was due to last year’s results benefiting from the proceeds of the HOS disposition.

For the year, EPS landed at $4.51. The company invested $2.6 million in its infrastructure during the year, adding 70,000 customer connections through closed acquisitions and organic growth. The company now has general rate cases in progress in three jurisdictions and filed for infrastructure surcharges in two jurisdictions, reflecting a total annualized revenue request of approximately $181 million.

For FY 2023, management expects EPS to land between $4.72 and $4.82, the midpoint of which we have utilized in our estimates. They also affirmed the long-term EPS growth outlook of between 7% and 9%.

Click here to download our most recent Sure Analysis report on AWK (preview of page 1 of 3 shown below):

Water Stock #4: Danaher Corporation (DHR)

5-year expected annual returns: 9.0%

Danaher Corporation is active in the healthcare industry and designs, manufactures and markets professional, medical, industrial, and commercial products and services. The company operates through three main segments: Life & Bio Sciences (38% of annual revenue – end of 2022), Diagnostics (35% of annual revenue), and Environmental & Applied Solutions (15% of annual revenue). The company made 14 acquisitions in 2021 for a total of $11.0 billion, including the Aldevron acquisition of $9.6 billion.

On January 24th, 2023, Danaher Corporation released its fourth quarter fiscal 2022 results for the period ending December 31st, 2022. For the quarter the company reported revenue of $8.37 billion which represents a 2.7% increase compared with revenue of $7.58 billion in the same quarter of 2021.

Revenue from the Life Sciences segment totaled $1.95 billion, rising 7.9% year-over-year. Revenue from the Diagnostics segment grossed $2.965 billion, increasing 7.5% year-over-year. Revenue from the Environmental & Applied Solutions segment totaled $1.235 billion, up 5.5% year-over-year. Revenues from the Biotechnology segment totaled $2,223 million, down nearly 1% year over year.

Reported quarterly earnings per diluted share equaled $2.87 which represents a 6.5% increase over the comparable 2021 period. For the full year 2022, net earnings were $7.1 billion, or $9.66 per diluted common share which represents a 13.5% year-over-year increase.

For the first quarter 2023, the management anticipates that core revenue growth will be around 5%. For the full year of 2023, the company expects that core revenue growth will be in the high-single-digit percent range. Organic sales growth is estimated to increase in mid-single digits in the first quarter and the full year.

Click here to download our most recent Sure Analysis report on Danaher (preview of page 1 of 3 shown below):

Water Stock #3: Stantec Inc. (STN)

5-year expected annual returns: 9.3%

Stantec Inc. provides professional consulting services in the field of infrastructure and facilities internationally. This includes services in engineering, architecture, interior design, environmental sciences, project management, and project economics.

The company also undertakes water provision, transportation, and public works such as transportation planning and traffic engineering.

Source: Investor Presentation

Finally, it serves the urban regeneration, infrastructure, education, and waste industries. Stantec generates around $3.6 billion in annual revenues and is based in Edmonton, Canada.

On February 22nd, 2023, Stantec released its Q4-2022 and full-year results for the period ending December 31st, 2022. Quarterly net revenues came in at $834.9 million, 23.4% higher on a constant basis year-over-year, reflecting 10.6% organic and 9.8% acquisition net revenue growth. Adjusted net income increased by 42.8% to $20.0 million. While the project margin fell from 55.3% to 54.9%, administrative and marketing expenses as a percentage of net sales declined from 42.3% to 39.9% – hence the increase.

On a per-share basis, adjusted net income was $0.82, implying a year-over-year growth of 43.9%, as it was further boosted by a lower share count. The company’s contract backlog increased to $4.3 billion, 14.9% higher year-over-year, including double-digit growth in Buildings and Energy & Resources and Environmental Services backlog. It represents about 12 months’ of work.

For the full year, management expects net revenue growth between 7% and 11% and adjusted EPS growth between 9% and 13% in comparison to FY 2022.

Click here to download our most recent Sure Analysis report on STN (preview of page 1 of 3 shown below):

Water Stock #2: Roper Technologies (ROP)

5-year expected annual returns: 9.5%

Roper Technologies  is a specialized industrial company that manufactures products such as medical and scientific imaging equipment, pumps, and material analysis equipment. Roper Technologies also develops software solutions for the healthcare, transportation, food, energy, and water industries. The company was founded in 1981, generates around $5.4 billion in annual revenues, and is based in Sarasota, Florida.

On November 10th, 2022, Roper raised its dividend for the 30th consecutive year by 10.1% to a quarterly rate of $0.6825.

On January 27th, 2023, Roper reported its Q4-2022 and full-year results for the period ending December 31st, 2022.

Source: Investor Presentation

On a continuing operations basis, quarterly revenues and adjusted EPS were $1.26 billion and $3.92, indicating a year-over-year increase of 14% and 17%, respectively. The company’s momentum during the quarter remained strong, with organic growth coming in at 7%. Organic growth was once again driven by broad-based strength across its portfolio of niche-leading businesses.

Adjusted EPS of $14.28 for the year actually grew 15% compared to last year taking into account recent divestitures. The minor margin in our tables between the two years reflects discontinued operations. Backed by Roper’s growth momentum, balance sheet strength, and a large pipeline of high-quality acquisition opportunities, management believes Roper is well positioned for continued double-digit cash flow growth.

Roper initiated its adjusted EPS guidance for the FY2023, expecting it to land between $15.90 and $16.20. We have utilized the midpoint of this range in our estimates, which implies a year-over-year growth of 12.4%.

Click here to download our most recent Sure Analysis report on Roper (preview of page 1 of 3 shown below):

Water Stock #1: Algonquin Power & Utilities Corp. (AQN)

5-year expected annual returns: 20.1%

Algonquin Power & Utilities Corp. trades on both the Toronto Stock Exchange and New York Stock Exchange under the ticker, AQN. The renewable power and utility company was founded in 1988. The company has increased its dividend every year since 2011.

It has two business segments: regulated utilities (natural gas, electric, and water) and non-regulated renewable energy (wind, solar, hydro, and thermal). Combined, its entire portfolio has 4.3 GW of generating capacity that it aims to achieve 75% renewable energy generation by 2023.

Source: Investor Presentation

Algonquin serves more than 1 million connections primarily in the U.S. and Canada. It also has renewable and clean energy facilities that are largely (about 82%) under long-term contracts of ~12 years with inflation escalations.

Algonquin reported its Q3 2022 results on 11/11/22. For the quarter, revenue rose 26% to $666.7 million, adjusted net earnings fell 25% to $73.5 million, adjusted earnings-per-share (“EPS”) fell 27% to $0.11, but adjusted EBITDA, a cash flow proxy, increased by 10% to $276.1 million, against Q3 2021.

Management noted that the quarterly results were impacted by higher interest rates and delays in the construction and completion of certain renewable projects due to the timing of tax incentives.

The pending Kentucky Power acquisition would add to the rate base of its regulated utilities fleet with an expected close in the second half of 2022. In October, AQN announced that it was performing capital recycling on four wind projects that would raise cash proceeds of $278 million and C$107 million. AQN reduced its 2022 EPS estimate to $0.66-$0.69.

Click here to download our most recent Sure Analysis report on AQN (preview of page 1 of 3 shown below):

Final Thoughts

Water could be one of the biggest investing themes over the next several decades. An increasing global population is only going to cause demand for water to rise in the future.

And, given the fact that water is a necessity of human life, demand for water should hold up extremely well, even during the worst recessions.

Therefore, young investors with a longer time horizon such as Millennials should consider water stocks.

These factors make water stocks appealing for risk-averse investors looking for stability from their stock investments.

Not all the water stocks on this list receive buy recommendations at this time, as some appear to be overvalued today. But all the water stocks on this list pay dividends and are likely to increase their dividends for many years in the future.

Additional Resources

At Sure Dividend, we often advocate for investing in companies with a high probability of increasing their dividends each and every year.

If that strategy appeals to you, it may be useful to browse through the following databases of dividend growth stocks:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: