Mueller: Dip Into Water Services

12/11/2020 5:00 am EST

Focus:

Genia Turanova

Lead Analyst and Editor, MoneyFlow Trader

Mueller Water Products (MWA), based in Atlanta, GA, provides essential products and services to water utilities for repair and replacement work. It is a smart investment for growth and income, observes Genia Turanova, dividend expert and editor of Unlimited Income.

MWA products are needed for a variety of applications, from municipal water and wastewater facilities to new residential construction. 

About two-thirds of the company's revenue comes from municipalities, about a quarter from new construction, and the rest, just under 10%, from the water needs of natural gas utilities. 

Earlier in 2020, amidst the economic and market turmoil, was designated an essential business. As a result, all of its facilities stayed open, and the business continued to operate. 

Like the rest of the country, MWA encountered challenges (including supply chain issues related to the temporary closure of its Jingmen facility located near Wuhan, China). But the company handled them well - if you judge by its dividend policies. 

MWA not only didn't have to eliminate or cut its dividend, but the company already hiked it this fall. The 5% quarterly dividend increase announced on October 23 ($0.055 from $0.0525 per share for the yield of 1.8%) is, in fact, as good a testimonial to the ongoing business strength as possible. 

U.S. water infrastructure is in need of a major upgrade. We can reasonably expect that water infrastructure will be a part of a new infrastructure spending of the Biden administration. 

Mueller is one of the only companies that can fulfill the needs of water utilities from end to end: at the source, at the plant, below the ground, on the street and in the cloud. Plus, it's still significantly cheaper than its peers. I think it's just a matter of time before the market wakes up to the unique positioning of this company.

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