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The Importance Of Aqua America’s Q2 2015 Earnings

Diluted income from continuing operations per share increases to $0.32. Quarterly cash dividend increases 7.9 percent to $0.178. The ongoing trend of strategic acquisitions is gaining steam and alters the future prospects for Aqua America. Aqua America (NYSE: WTR ), the second-biggest publicly traded U.S. water utility, reported earnings that reinforced its position as an excellent defensive play, a stock that can consistently deliver price gains even during periods of market duress. Aqua reported income from continuing operations of $57.4 million, which represents a notable annual increase of 4.7 percent. Earnings per share rose to $0.32 for the quarter, compared to $0.31 for the same quarter in 2014. As a result of robust customer growth, revenues increased to $205.8 million, rising 5.4 percent compared to the second quarter of last year. On a year to date basis, Aqua America achieved a 9 percent increase in income. During the same period, Aqua completed eight acquisitions, expanding its customer base by almost 8,700 connections. It aims to close at least 15 acquisitions by the end of the year, which is expected to result in an annual customer growth of 1.5 to 2 percent. This is the reflection of its successful strategy to focus on building value by fully optimizing its rapidly increasing asset portfolio while boosting acquisitions and controlling expenses. (click to enlarge) The long standing tradition of substantial dividend increases was reaffirmed . In fact, Aqua has paid a consecutive quarterly dividend for 70 years and the latest quarterly cash dividend of $0.178 per share, 7.9 percent higher compared to the previous quarter, represented the company’s 25th dividend increase in 24 years. It’s clearly impressive that the dividend has been increasing at an annual growth rate of 7.6 percent, which speaks to the company’s financial strength and unfailing commitment to increase shareholder value. In the first half of 2015, Aqua invested $150.1 million in infrastructure enhancements. More importantly, the company’s capital investment plan includes the increase of such investments to $325 million by the end of the year and more than $1 billion over the next three years. This demonstrates the management’s ambition and resolve to move forward aggressively despite the overhanging market turbulence. (click to enlarge) The cornerstone of Aqua America’s success has been its sophisticated expansionary approach aimed at constantly seeking acquisition opportunities that strategically expand its network of municipal and privately owned systems. The success of this approach is highlighted by the resilience shown during the recent vertiginous market swings and the subsequent outperformance of most major indexes. Aqua America has consistently maintained an edge over its main competitors in most crucial areas, and this trend remains intact. 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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Share this article with a colleague

Falling Prices Are Good, Unless You Are An Imminent Seller

When the stock market is tanking, like it has been recently, I find many people are scared to talk to me about it. They seem to think that declining stock prices are like a death in the family – a reason to offer condolences. But, why is that? I don’t fret if I go to the grocery store and find prices have fallen 20%. When I go to buy gas, I’m quite happy to find prices have fallen. Why is this so different with stock prices? After all, I’m a net buyer of investments. Only if I had some imminent plan to sell my stocks because I needed the money very soon would falling prices be a bad thing. I think most people think I’m putting on a brave face or bucking myself up when I say I’m happy to see stock prices falling. They can’t seem to conceive that falling prices are good for buyers of stocks just as it is good for buyers of groceries, gas, cars or even houses. I think that is because people too closely associate themselves with their current net worth. Instead of conceiving of their net worth as something in flux, that goes up and down like everything in the economy, they feel their current net worth indicates how much they can pull over time. But, current net worth is a snapshot, not life itself. Just as a picture cannot capture a life, neither can current net worth define your lifetime cash flow. Even for those close to or in retirement, stock market fluctuations need not be of major concern. If you have money you need to spend next month or next year in the stock market, you are indeed at risk. But you need not bear that risk unless you choose to. Your cash needs for the next three or so years should be in a stable value position, like a bank or money market account, not in the stock market. Most people who fret over stock market returns don’t need that money soon, either. They know they will need it in time, but they don’t need it today. Market volatility and declines are a benefit to the calm investor who knows that current net worth is just a snapshot. Thought of in this way, stock market drops can lead to higher net worth over time and increased cash flows. That is why I’m happy to see the stock market decline, and I think others should be, too.