We came across a bullish thesis on SJW Group (SJW) on Substack by Serhio MaxDividends. In this article, we will summarize the bulls’ thesis on SJW. SJW Group (SJW)’s share was trading at $54.35 as of March 3rd. SJW’s trailing and forward P/E were 18.95 and 18.45 respectively according to Yahoo Finance.
An aerial view of an expansive reservoir and surrounding landscape supplying the utility’s water.
SJW Group (SJW) is a dividend powerhouse in the water utility industry, boasting an impressive 57-year streak of uninterrupted dividend payments and a 3.21% yield. With an annual dividend of $1.68 and a three-year dividend growth rate of 5.90%, the company has consistently rewarded shareholders while maintaining a sustainable payout ratio of 60.87%. As a regulated water utility serving over 1.5 million people across California, Texas, Maine, and Connecticut, SJW benefits from a stable, non-cyclical demand for its services, ensuring predictable cash flows and reliable returns for investors.
In 2023, the company reported $668 million in revenue, marking a 7% increase from the previous year, while net income rose to $70 million from $64 million in 2022. Earnings per share grew to $2.30, reflecting SJW’s steady financial performance. This consistency has allowed the company to maintain and grow its dividend without compromising financial stability. As one of the few water utilities with a 57-year dividend streak, SJW has solidified its reputation as a dependable income-generating investment.
The company is not just about stability; it is actively expanding through strategic acquisitions. In 2019, SJW completed a $1.1 billion merger with Connecticut Water Service, significantly increasing its geographic footprint and customer base. With ongoing infrastructure upgrades and future expansion plans, SJW is well-positioned for continued growth.
With a history dating back to 1866 as the San Jose Water Company, SJW has evolved into a multi-state operation while staying true to its core mission of delivering safe and reliable water services. Its strong financial position reinforces its status as a top-tier investment for dividend seekers.
SJW Group (SJW) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held SJW at the end of the fourth quarter which was 18 in the previous quarter. While we acknowledge the risk and potential of SJW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SJW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.