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The York Water to Reward Shareholders With 4% Dividend Hike

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The York Water Company’s (YORW - Free Report) board of directors announced a hike in the quarterly dividend to 18.02 cents per share, up 4% from the previous rate. The quarterly dividend will be paid out on Jan 15, 2020 to shareholders of record as of Dec 31, 2019.

The current annual dividend yield of the company is 1.63% compared with the industry’s 1.68%.

Reasons for the Dividend Hike

The Utilities sector provides basic services like — electric, water and gas. Consistent demand for these services has enabled utility companies to maintain steady earnings and cash flow. This helps the companies to reward shareholders with regular dividend payouts and share buybacks.  

The recent hike marks the company’s 596th uninterrupted dividend payout and 23rd consecutive year of dividend increase. The York Water‘s shares have gained 38% year to date compared with the industry’s rise of 33.5%.

Other firms from the same sector are also increasing dividends to reward shareholders. On Sep 25, 2019, OGE Energy Corporation (OGE - Free Report) announced that its board of directors has approved a 6% increase in the quarterly dividend rate. On Sep 20, IDACORP (IDA - Free Report) announced that its board of directors has approved a 6.3% increase in the quarterly dividend rate to 67 cents. In July 8, Duke Energy (DUK - Free Report) announced that its board of directors has approved 1.85% increase in quarterly dividend rate to 94.5 cents.

Can York Water Maintain Hikes?

York Water is a water utility company that makes systematic investments to expand and upgrade its existing infrastructure. Upgrading aging water, wastewater treatment facilities and water mains enables the company to improve quality and reliability of water as well as wastewater services.

For the first nine months of 2019, the company invested $13.3 million in construction expenditures for dam improvements along with various infrastructural replacements and developments.

Moreover, the average number of water customers served in the first nine months of 2019 increased by 544 from the year-ago period’s levels to 68,407 customers.  The average number of wastewater customers served in the first nine months of 2019 increased by 230 from year-ago period’s levels to 2,522 customers, courtesy of the recent acquisition. The company invested $2.1 million in the acquisition of a wastewater system.  The company expects to invest an additional $4.5 million in 2019, excluding acquisitions to cater to the growing customer base. We believe that a strong cash flow, a sturdy capex plan and increasing customer base will generate sufficient funds to meet financial commitments.

Zacks Rank

The York Water currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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