Tag Archives: middlesex-water

Dividend Growth Stock Overview: Middlesex Water Company

Summary MSEX provides water and wastewater services to about 450,000 people across New Jersey, Delaware and Pennsylvania. The company has paid dividends since 1912 and increased them since 1973. MSEX has compounded dividends at less than 1.5% for the last decade and less than 2% for the last quarter century. About Middlesex Water Company Middlesex Water Company (NASDAQ: MSEX ) provides water and wastewater services to over 450,000 people across parts of New Jersey, Delaware and Pennsylvania. The company began operating water utility services in New Jersey in 1897, and recently expanded to Delaware in 1992 and Pennsylvania in 2009. The company also received approval to operate in Maryland in 2007, but does not have any business there. Image from Middlesex Water Company’s website . Middlesex Water divides its operations into two business segments – regulated and unregulated. Like most utilities, the company receives most of its revenue and income from its regulated business, providing an average of 88% and 93% of revenues and income from 2012-2014. In 2014, Middlesex’s regulated businesses had revenues of $103.3 million, up 2.6% from 2013, and net income of $17.3 million, up 11.6%. The increase in revenues was due to higher customer demand and rate increases from regulatory agencies. The large net income increase was due to lower expenses from improved performance in the company’s pension plan and fewer water main breaks as compared to 2013. The unregulated business segment – covering Middlesex’s service in Perth Amboy, NJ; Avalon, NJ; and portions of Delaware – had net income of $1.2 million on revenues of $13.8 million, up 9.1% and down 2.1%, respectively. In 2014, Middlesex Water had total revenues of $117.1 million, of which nearly half came from residential customers. The company’s net income was up nearly 11% year-over-year to $18.4 million and EPS were up 9.7% to $1.13. With the annualized dividend payment of 77 cents per share, Middlesex Water has a payout ratio of about 68%. The company trades under the ticker symbol MSEX. Middlesex Water Company’s Dividend and Stock Split History Middlesex Water has grown dividends incredibly slowly – less than 1.5% a year for the last decade. Middlesex Water has paid dividends continuously since 1912 and increased them annually since 1973. The company pays out its quarterly dividends at the beginning of March, June, September, and December. Annual dividend increases are announced around the 20th of October, with the stock going ex-dividend in mid-November. Last November, Middlesex Water announced a 1.3% increase in the quarterly dividend to an annualized payment of 77 cents per share. Middlesex Water should announce its 43rd annual dividend increase in October 2015. Middlesex Water has built a record of steady, but very slow dividend growth. Since 2004, the company has increased its annual dividend by a penny a year, resulting in 5- and 10-year compounded annual dividend growth rates (CADGRs) of 1.4%. Longer term, the dividend growth record is not much better; the 20-year and 25-year CADGRs are 1.9% and 2.0%, respectively. The company has split its stock 4 times since beginning its record of annual dividend growth. 2-for-1 splits occurred in December 1984 and September 1992; a 3-for-2 split occurred in January 2002; and a 4-for-3 split occurred in November 2003. Prior to 1973, Middlesex Water split its stock 5-for-1 in October 1927; 3-for-2 in October 1959; and 2-for-1 in December 1967. A single share of Middlesex Water’s stock purchased in 1973 would have split into 8 shares. Over the 5 years ending on December 31, 2014, Middlesex Water’s stock appreciated at an annualized rate of 9.52%, from a split-adjusted $14.39 to $22.67. This underperformed the 13.0% annualized return of the S&P 500 during this time. Middlesex Water Company’s Direct Purchase and Dividend Reinvestment Plans Middlesex Water Company has both direct purchase and dividend reinvestment plans. You do not need to be a current investor to participate. New investors must purchase at least $500 of Middlesex Water’s stock and are required to reinvest dividends on at least 10 shares of stock. Subsequent purchases of stock must be at least $25. The fee structure of the plan is favorable for investors, with the company picking up all fees on stock purchases. When you sell your shares, you’ll pay a sales commission of $15 plus associated brokerage fees. All fees are deducted from the sales proceeds. Helpful Links Middlesex Water Company’s Investor Relations Website Current quote and financial summary for Middlesex Water Company (finviz.com) Information on the direct purchase and dividend reinvestment plans for Middlesex Water Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Middlesex Water Company Is Dull, Solid, And Pays A 3.5% Dividend

Middlesex Water Co. pays a 3.5% annual dividend. It operates in the financially well-off states of New Jersey, Delaware, and Pennsylvania. Its income should see little disruption due to economic conditions. Water supply and wastewater treatment have relatively low energy requirements, so MSEX should not lose lots of income when energy prices eventually rise. MSEX has been in business since 1897, so your money should be relatively safe here; and MSEX will pay you to wait for a recovery if necessary. “The Middlesex Water Company (NASDAQ: MSEX ) owns and operates regulated water utility and wastewater systems in New Jersey, Delaware, and Pennsylvania. It also operates water and wastewater systems under contract on behalf of municipal and private clients in New Jersey and Delaware. These states all rank in the top half of the median household income for US states. New Jersey is number three. Delaware is number eleven. Even in a downturn MSEX’s customers should not be hard put to afford their bills. MSEX’s income stream is probably as solid as you can possibly get. Even in a downturn, you still need to do dishes, laundry, drink water, use the bathroom facilities, etc. If there is a downturn, MSEX pays a stable 3.5% annual dividend. MSEX will pay you to wait for the stock price to recover, if it falls. Further MSEX probably will not fall as far as most stocks even in a downturn. It has a Beta of 0.70; and it has a debt rating of Stable A- from S&P. Further, it does not have the “not green enough” or “too dangerous” problems that electricity generating utilities have due to coal power plants or nuclear power plants. The Middlesex Water Company has also been performing solidly financially for years. The charts below give investors a good idea about this. The trend upward in operating revenues, net income, EPS, and dividends has been very strong since 2011. The increase in the dividend has been steady; but the percentage has only approximately equaled the rate of inflation from 2011-2014. This is mildly disappointing. However, the 2014 EPS of 1.13 gives investors hope that the company may eventually increase the now $0.77 per share annual dividend by a larger amount than the $0.01 per year increases of the last five years. In Q1 2015, MSEX continued to build upon its strong and steady growth. Consolidated operating revenues increased 5.9% year over year ( $28.8 million versus $27.2 million). Net Income rose 14.7% ($3.6 million versus $3.1 million in Q1 2014); and EPS were up 10% year over year ($0.22 versus $0.20 in Q1 2014). MSEX also raised the dividend on April 24, 2015 to $0.1925 per common share per quarter ($0.77 per common share annually from $0.76). Revenues from the Middlesex System in New Jersey increased $0.6 million due largely to a rate increase approved by the New Jersey Board of Public Utilities (and implemented in July 2014). Revenues from MSEX’s Delaware System, Tidewater Utilities Inc., increased $0.7 million primarily due to greater customer demand. Revenues from contract operations increased $0.4 million year over year. MSEX hasn’t let the grass grow under its feet in 2015. On April 1, 2015 it filed a request with the New Jersey Board of Public Utilities for a rate adjustment of about 13.53% in water rates for its Middlesex System in New Jersey. This was to recover costs for repairs and upgrades to its drinking water infrastructure as well as for increased costs in chemicals, fuel, electricity, technology, taxes, labor, benefits, and other factors impacting operating income. Continued diligence with respect to expenses should help MSEX remain highly profitable. It has also had higher expenses. Operating and maintenance expenses increased $0.7 million in Q1 2015 year over year. Employee Benefit Expenses increased $0.7 million year over year. This was mostly due to longer life expectancies. Various other costs increased or decreased. However, MSEX seems to be managing this all well. It seems to have a good team; and it should be a safe investment. It is a buy. The fact that most utilities have retreated considerably recently should only make MSEX more attractive. See the five-year chart below of the Utilities Select Sector SPDR ETF (NYSEARCA: XLU ). (click to enlarge) As investors can see, the sector has fallen about 10% in stock price recently. Many people believe this may have been due to the interest rate (rise) scare due to the Grexit threat. Given the relative strength of the XLU uptrend, this may be a good buying opportunity for utilities in general. The five-year chart of MSEX provides some technical direction for a trade/investment in this specific stock. (click to enlarge) Although a bit bumpier, the MSEX chart shows the same strong uptrend as the sector chart. Further, a good water utility is about as safe a bet as you can make. MSEX has proven it is a good one. Investors should be able to invest in it with confidence. Its 3.5% dividend should pay you nicely to wait for a recovery from any future pullback(s) there may be. People always need water; and it is becoming an increasingly scarce commodity with global warming and greater populations. MSEX is a solid holding. It has increased its dividend for 42 consecutive years . There has been a small amount of insider buying in the last six months. It has met or exceeded EPS estimates each of the last four quarters. MSEX is a buy. NOTE: Some of the fundamental fiscal data above is from Yahoo Finance. Good Luck Trading/Investing. Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in MSEX over the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.