Time to Leave Water Utility Stocks as Dividend Flow Slows

In 2014 there were 12 dividend-paying water utility stocks worth buying because of their cash flow from dividends. But things have changed -- the dividend cash flow has slowed to a drip.

Since 2014 one utility is no longer traded publicly. Of the remaining 11 one has been a loser as shown in the table below. Six set new highs this week as investors rushed out of many stocks into "flight to safety" instruments including dividend-paying utilities.

What does this scorecard for 11 water utility stocks mean for you? It means it is time to book profits because six reached new highs and have become technically overbought. In addition, their dividend yields have declined, reducing their desirability.

Artesian Resources (ARTNA)  trades around $31, up 12.7% year to date and up 45.2% since July 9, 2014. The stock's dividend yield is just 2.87% versus 3.87% on July 9, 2014, and the 2016 high of $31.94 was set on Feb. 3. The weekly chart is positive with its key weekly moving average of $28.95. Investors should consider reducing holdings now versus this month's key level of $31.01. The downside until the end of 2016 is $24.51.

American Water Works (AWK)  is close to $79, setting a new high of $78.75. The stock's dividend yield is just 1.91% versus 2.55% on July 9, 2014, and the weekly chart has been positive but overbought since 2016 began. The stock is up 31.7% year to date and is up 62.3% since July 9, 2014. Investors should reduce holdings as the stock has already achieved its upside potential for 2016 of $78.36.

American States Water (AWR)  , at around $41, set its 2016 high of $47.24 on Feb, 19. The stock's dividend yield is just 2.18% versus 2.64% on July 9, 2014, and the weekly chart is positive with the stock above its key weekly moving average of $40.50. The stock has slipped 1.7% year to date but is up 28.6% since July 9, 2014. Investors should reduce holdings as the stock has risk to $35.20, which is a key level on technical charts until the end of 2016.

Connecticut Water Service (CTWS)  trades around $53 after setting a new high of $53.15 on Wednesday. The stock's dividend yield is just 2.15% versus 2.98% on July 9, 2014, and the weekly chart has been positive but overbought since 2016 began. The stock is up 38.7% year to date and up 59.2% since July 9, 2014. Investors should reduce holdings as the downside risk is to $38.87 by the end of 2016.

Consolidated Water (CWCO)  trades around $12 after setting its 2016 high of $14.69 on May 6. The weekly chart is negative with the 200-week simple moving average of $11.37 a key support. The stock is up just 1.1% year to date and up 13.6% since July 9. 2014.

California Water Services (CWT)  trades around $32 after setting a new high of $32.39 on June 15. The weekly chart has been positive but overbought since 2016 began. The stock is up 37.1% year to date and up 34.9% since July 9, 2014. Investors should reduce holdings as the downside risk is to $23.95 by the end of 2016.

Middlesex Water (MSEX)  trades close to its Thursday high of $40.65. The weekly chart has been positive but overbought since 2016 began. The stock is up 53.1% year to date and up 93.2% since July 9, 2014. Investors should reduce holdings as the downside risk is to $22.94 by the end of 2016.

Pure Cycle Corp (PCYO)  trades close to $5 with a gain of just 1.3% year to date and down 25.6% since July 9, 2014. The stock has a dividend yield of just 1.98% and its weekly chart is positive with the stock below its 200-week simple moving average of $5.01. Investors should reduce holdings on strength to $7.47, which is the upside potential until the end of June.

SJW Corp (SJW)  trades close to its high of $38.50 set on June 13. The weekly chart is positive with the stock up 29.5% year to date and up 41.7% since July 9, 2014. Investors should reduce holdings as the downside risk is to $20.98 by the end of 2016.

Aqua America (WTR)  trades just close to the high of $34.31 set Wednesday. The stock has a dividend yield of just 2.08% versus 2.43% on July 9, 2014 and its weekly chart is positive but overbought with the stock is up 14.9% year to date and up 37.3% since July 9, 2014. Investors should reduce holdings as the upside should be limited to $35.30 with the downside risk is to $26.67 by the end of 2016.

York Water (YORW)  trades around $30 after setting a multiyear high of $33.40 on April 20. The stock has a dividend yield of just 2.05% and its weekly chart is positive as long as the stock stays above its key weekly moving average of $29.19. The stock is up 22.2% year to date and up 51.2% since July 9, 2014. Investors should reduce holdings as the upside should be limited to $32,45 and the downside risk is to $22.97 by the end of 2016.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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