Top Monthly Dividend Stocks Include Global Water Resources
By: Olivia Faucher,
Top monthly dividend stocks to buy during the COVID-19 pandemic include Global Water Resources, Inc. (NASDAQ:GWRS).
Global Water Resources, Inc. is a water resource management company based in Phoenix, Arizona. GWRS manages regulated water, wastewater and recycled water utilities. The company, founded in 2003, serves approximately 55,000 people throughout the metropolitan region of Phoenix, Arizona.
Performance of Global Water Resources
GWRS’s share price is currently sitting at $11.23 (as of October 15, 2020), which is 25% lower than the stock’s 52-week high of $14.99. The company’s stock price has been negatively impacted over the last six months due to the COVID-19 pandemic, but it has been on a consistent upward trend in the last five years. GWRS operates in the utilities industry, an industry which has not been particularly impacted by the pandemic. Given that GWRS operates in an industry that is fairly safe, investors can expect that the stock price will continue with the upward trend of the last five years once the economy rebounds.
It is reassuring that GWRS did not suspend its dividend policy and that the company has maintained the same dividend payout amount since December of 2019, not having to decrease the payout due to the impact of the pandemic. GWRS is set to pay another consistent monthly dividend in October.
Revenue in Q2 2020 totaled 9.9 million, up 8.4% from Q1 2020. Revenue growth is an indication that the company is expanding and it also signals that the company has healthy sales.
Current Dividend Yield and Payouts for One of the Top Monthly Divdidend Stocks
GWRS began to pay monthly dividends in 2016, and has consistently delivered monthly dividends since then. For the four years that the company has been paying a monthly dividend, the dividend has increased each year. GWRS has achieved a 3.85% growth rate in its dividend over the last three years. Currently, the company is paying out a monthly dividend of $0.0241, making the annualized payout $0.29. GWRS’s current dividend yield is 2.59%.
Price/Earnings Ratio
GWRS has a current P/E ratio of 280.75 for the TTM. This P/E ratio is relatively high compared to the industry average P/E ratio of 28.23. This could be an alarming metric to some investors, but its revenue has been growing. along with its operating income. High growth companies typically have high P/E ratios. It should also be kept in mind that, while a seemingly high P/E ratio can indicate that a stock is overvalued, it can also signal that it is an exciting stock with strong growth potential.
Comments from GWRS Leadership
The CEO of GWRS, Ron Fleming, recently addressed the impact of the COVID-19 pandemic on his company in the second quarter of 2020. He previously explained that GWRS could potentially reap the benefit of increased water usage, but he also acknowledged the challenges that will arise. In the most recent earnings report on August 5, 2020, Fleming said the following: “In Q2, we continued to focus on management of the COVID-19 pandemic and the related impacts on our company and the communities we have the privilege to serve. While the pandemic did not have a material impact on our uncollectable accounts, we believe it may have slowed the increase in new connections.”
However, Fleming is optimistic about his company’s resilience and strategy to navigate unprecedented economic challenges going forward. He also said the following on Aug. 5, 2020: “Our ongoing commitment is to provide safe and reliable water service including a strong focus on efficiency and conservation. As we pursue these business objectives, we will continue to apply our integrated utility solution and expertise to create benefits for all stakeholders, from the communities and customers we serve, to our development and municipal partners, dedicated staff and regulators. The continued expansion of our platform will help us to pursue the many water and wastewater opportunities emerging in the growth corridors around metropolitan Phoenix.”
Why dividendinvestor.com believes GWRS Stock is a Buy
- Its dividend appears to be safe and does not seem at risk of succumbing to the pandemic’s impacts and being suspended.
- GWRS operates in an industry that has remained relatively unaffected by the pandemic
- Leadership at GWRS is confident that the company will survive the current market volatility without experiencing detrimental financial implications
Key Risks for GWRS
- Public health risk: Any failures or inadequacies during the treatment and distribution process can negatively impact the water quality that is being delivered to consumers. Contaminated water can pose great risks to those who use it.
- Environmental risk: Equipment failure or human error can lead to environmental impacts. The consequences include harmful discharges to the atmosphere, ground or the water environment.
- Reputation risk: Loss of consumer confidence can be detrimental to a water supply company. Any incidents that result in a loss of trust in GWRS could prove to be harmful to its stock.
Competitive Analysis
The chart below compares Global Water Resources (GWRS) to two of its competitors, Pure Cycle Corporation( (PCYO) and York Water Company (YORW), in terms of various financial metrics.
| GWRS | PCYO | YORW | |
| Current Stock Price | $11.23 | $9.49 | $44.92 |
| Market Cap | $253.6 million | $226.4 million | $585.5 million |
| Beta | 0.42 | 0.54 | 0.15 |
| P/E Ratio (TTM) | 280.75 | 24.97 | 36.37 |
| EPS (TTM) | 0.04 | 0.38 | 1.24 |
| Dividend Frequency | Monthly | Do not pay a dividend | Quarterly |
| Dividend Yield | 2.59% | N/A | 1.62% |
Although GWRS does not particularly stand out amongst competitors in every financial aspect, the company is unique in that it provides a reliable monthly dividend to its investors. GWRS could be a solid investment for an investor who is seeking a dividend stock to add to his or her portfolio. The dependable monthly dividend is what distinguishes GWRS from its competitors. To learn about other monthly dividend stock suggestions, read the following article: 6 Best Monthly Dividend Stocks to Buy Now.
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