Middlesex Water Co. (MSEX) is a utility firm that was incorporated all the way back in 1897 to provide water service, asserts Mike Larson, editor of Under the Radar Stocks.
For some historical perspective, William McKinley took office as the 25th president in March of that year. The first Boston Marathon took place one month later. And by summertime, thousands of prospectors were heading to the Yukon as part of the Klondike Gold Rush.
The company’s coverage area now spans parts of New Jersey, Pennsylvania and Delaware. It provides water production and distribution services, wastewater collection and treatment, and system design and construction expertise to tens of thousands of residential and commercial customers.
The utility's business isn’t “sexy.” But it is a consistent and profitable one. In the third quarter, revenue rose 7% to $38.7 million from $36.2 million a year earlier thanks to an increase in base rates and healthy customer growth.
Net income jumped to $12.3 million, or 74 cents per share, from $7.6 million, or 46 cents per share in the year-earlier period. But even if you exclude tax-related benefits, you still get a solid 2.5% increase in operating profit despite higher maintenance and labor costs.
What I really like is the firm’s history of paying respectable, growing dividends; MSEX has paid a dividend every single year since 1912.
Plus, it has raised its payout for the last 46 years in a row. The most recent dividend of 24 cents per share works out to an indicated, annualized yield of around 1.8%. It was also a 7.3% increase from a year earlier.
Meanwhile, the stock has been piling up respectable capital gains. Its shares have risen more than 47% in the last year despite a challenging market overall.
They continued to advance after a notable upside breakout in November 2018. That’s the kind of relative strength and performance I like to see. So, I recommend you add MSEX to your model portfolio.
