This Dividend King Is Getting Cheap

Good Yield, Good Growth, Good Metrics!

July 09, 2025

A few months ago, I reviewed a stock called H.B. Fuller Company ($FUL).

The firm makes adhesives and sealants that are used in airplanes, life rafts, food labels, and construction materials. At the time, H.B. Fuller was a beaten-down Dividend King with 55 years of consecutive dividend growth and a inflation-beating 5-year compound annual dividend growth rate of 7.03%.

While I was pretty agnostic on the company, not because it was a bad business but because I thought there were better marketplace opportunities, I noted that:

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This is a boring but necessary business. And with H.B. Fuller’s low payout ratio, this is a company that should continue paying steady dividend income for decades to come.

Since publishing, H.B. Fuller Company has rallied +15.20%. Wall Street recognized that an established business making essential products had gotten too cheap, and the market corrected itself.

Today’s featured stock is another Dividend King. One that used to trade at extremely high valuations, but has recently slipped to a multi-year low. And as a result, this business is now yielding 3.24% while also offering decent long-term dividend growth and a reasonably low payout ratio.

The company in question is H2O America ($HTO), a water utility that serves 1.6 million customers across the USA.

H2O America is a Dividend King that has paid dividends every year for the more than 80 years. And, the company has consistently raised its annual distributions for 57 consecutive years. While water utilities generally trade at a premium due to their stable and predictable business model, the sector’s seen a sell-off this year. Several water utility stocks like Artesian Resources Corporation and The York Water Company are down over the past 12 months.

And H2O America is part of this sell-off.

H2O America stock is down -4.75% over the past year. And, the stock is down considerably from its 2022 high of $82 per share.

At the time of writing, H2O America currently trades at a price to earnings ratio of 17.41.

And, H2O America is yielding a 3.24% starting dividend while maintaining a relatively safe payout ratio of 54.36% and an inflation-beating 5-year compound annual dividend growth rate of 5.75%.

This stock has lagged the general market, but H2O America has solid fundamentals and could be a great long-term investment if you’re looking for safe dividend income.

Here are the company’s key metrics…

H2O America ($HTO)

H2O America, formerly known as SJW Group, is a water utility firm that serves approximately 1.6 million customers across four different U.S. states: California, Maine, Connecticut, and Texas.

The company has paid nonstop dividends every year for more than 80 years. And, H2O America has consistently raised its dividend every year for the past 57 years.

Additionally, H2O America maintains a relatively low dividend payout ratio of 54.36%. This indicates the dividend is safe, and there is plenty of room for future growth. Although this company doesn’t grow its dividend at a super fast rate, H2O America does consistently hike their distributions by around 5% per year.

The company’s 5-year compound annual dividend rate is 5.75%. And per the “Rule of 72,” H2O America investors would double their yield on cost every 12.52 years.

Lastly, H2O America is consistently expanding its business. The company recently announced their plans to acquire Texas wastewater utility Quadvest. So, there is growth opportunity with this stock.

  • Forward PE ratio of 17.41

  • 3.24% starting dividend yield

  • 5-year dividend CAGR of 5.75%

  • Payout ratio of 54.36%

  • 10-year stock performance 7.60%

The 10-year stock performance on this company isn’t great. But, utilities have been in decline every since interest rates increased. Wall Street currently prefers high-yield treasury bills which carry less risk than buying publicly traded utility stocks.

Personally, I like H2O America at its current valuation. This is a stable, predictable business that’s been growing its dividend for almost 60 years.

At a price to earnings ratio of 17.41 and a starting dividend yield of 3.24%, I’d be happy acquiring shares for their income alone — not to mention any capital appreciation potential once Wall Street cycles back into the utility sector.

H2O America is a cheap Dividend King that’s not going to blow anyone’s stocks off with its cutting-edge innovations or amazing market-beating performance. But, it is a relatively cheap stock that operates in a stable sector.

And with a starting yield of 3.24% and a long-term dividend growth rate of around 5%, H2O America offers decent income potential for buy-and-hold investors.

Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.