Dividend Kings in Focus: Middlesex Water Firm – Certain Dividend

Up to date on July eleventh, 2025 by Felix Martinez

The Dividend Kings are an illustrious group of firms. These firms stand aside from the overwhelming majority of the market as they’ve raised dividends for not less than 50 consecutive years.

We consider that buyers ought to view the Dividend Kings because the highest-quality dividend development shares to purchase for the long run.

With this in thoughts, we created a full checklist of all of the Dividend Kings.

You possibly can obtain the complete checklist, together with vital monetary metrics akin to dividend yields and price-to-earnings ratios, by clicking the hyperlink beneath:

This group is so unique that there are simply 52 firms that qualify as a Dividend King. One of many constituents of the Dividend Kings checklist is Middlesex Water Firm (MSEX), a water utility firm that has been in enterprise for over 125 years.

This text will focus on the corporate’s enterprise overview, development prospects, aggressive benefits, and anticipated returns.

Enterprise Overview

Middlesex Water Firm was fashioned in 1897, making the corporate one of many oldest water and wastewater utility names within the U.S. The corporate has operations primarily in New Jersey and has an annual income of roughly $192 million.

Like lots of its friends, Middlesex is primarily targeted on the regulated portion of its enterprise.

Supply: Investor Presentation

Middlesex supplies primary water-related providers to prospects, akin to promoting, distributing, gathering, and treating water. The non-regulated enterprise contains service contracts that embrace the operation and upkeep of municipal non-public water and wastewater methods in New Jersey and Delaware.

The overwhelming majority of income comes from the regulated facet. One among its most vital service areas contains Middlesex County, the place the corporate supplies water providers to over 61,000 retail prospects. This enterprise contributed ~60% of income final 12 months.

Middlesex Water Firm reported Q1 2025 web earnings of $9.5 million, or $0.53 per diluted share, in comparison with $10.7 million, or $0.59 per share, in Q1 2024, a lower pushed by a one-time $4.3 million (web of tax) restoration in 2024 for prices associated to the Park Avenue water therapy plant, partially offset by charge will increase, buyer development, and better wholesale consumption in 2025. Working revenues rose 9.4% to $44.3 million from $40.5 million, with $3.4 million from the Middlesex system and $0.6 million from Tidewater Utilities, pushed by charge hikes and elevated utilization, although tempered by $0.2 million decrease non-regulated contract providers income. The corporate didn’t present particular full-year 2025 steerage however emphasised sustainable development and infrastructure funding.

Working bills elevated by $2.0 million to $32.7 million, primarily resulting from larger variable manufacturing prices, weather-related essential break exercise, and a $1.1 million improve in depreciation from new infrastructure. The corporate invested $19 million in water and wastewater infrastructure upgrades in Q1 2025, with plans for $93 million all year long. Middlesex accomplished the $4.6 million acquisition of Ocean View’s water utility belongings in Delaware, serving 900 prospects, and filed a 3rd DSIC charge utility in New Jersey, anticipated to generate $1.9 million in annual revenues beginning June 2025, including to $1.1 million from prior DSIC filings.

The corporate declared a Q2 2025 money dividend of $0.34 per share, payable June 2, 2025, persevering with its 52-year streak of annual dividend will increase. Middlesex’s monetary place remained robust, although particular liquidity particulars weren’t disclosed. The acquisition of Ocean View and ongoing infrastructure investments replicate Middlesex’s give attention to selective development and system resiliency. With a sturdy operational technique and regulatory progress, together with DSIC filings, the corporate is well-positioned to boost service reliability and ship long-term shareholder worth.

Development Prospects

Utility firms are usually labeled as gradual, however regular growers. This doesn’t essentially apply to Middlesex, nonetheless, as the corporate had an earnings-per-share compound annual development charge of seven.7% for the 2014 to 2024 time interval. This can be a robust development charge for a enterprise that’s largely regulated. It must be famous that development for the corporate hasn’t at all times been in a straight line over the long run.

For the reason that majority of income comes from regulated enterprise, Middlesex is on the mercy of the approval of charge will increase to develop.

Happily, the corporate closely invests in its infrastructure with a purpose to justify buyer charge will increase. For instance, the New Jersey Board of Public Utilities authorized a 40% improve in Middlesex’s charges in one of many firm’s most vital service areas for 2022. This wasn’t only a one-time elevate, because the approval board has at all times authorized the corporate’s request to lift charges.

Charge will increase will doubtless proceed to be a significant component for the corporate as Middlesex continues to make important investments in its getting old water infrastructure. This won’t solely enhance the standard of operations but additionally result in charge hikes being authorized.

Notably, Middlesex has loved an approximate common annual development of 12.8% in its charges during the last six years.

Supply: Investor Presentation

Subsequently, it’s only pure to count on charge hikes to comprise a big development driver for the utility within the upcoming years.

Along with charge will increase, Middlesex can develop by including new prospects whereas additionally preserving present prospects.

For instance, final 12 months, Middlesex accomplished a new settlement to proceed to handle water and sewer utility operations with the Borough of Avalon, New Jersey. The brand new 10-year settlement takes the place of the prior contract. The brand new contract supplies for the upkeep of operations and buyer providers.

The non-regulated enterprise could possibly be a big supply of development as nicely. In 2013, Middlesex was awarded a $32 million contract to assemble and keep the water distribution community for the Dover Air Pressure Base in Delaware. This contract will present a long time of recurring income, because the contract is for 50 years.

We count on MSEX to develop its earnings-per-share by roughly 4.6% per 12 months on common over the subsequent 5 years.

Aggressive Benefits & Recession Efficiency

Utility firms usually profit from a number of benefits. The primary is that they normally function in a near-monopoly within the areas that they serve.

Within the case of water utilities, Middlesex and its friends present essentially the most primary staple of all, water. Clients are going to want the providers that the corporate provides, whatever the energy of the economic system.

Middlesex additionally advantages from its diversified enterprise.

Supply: Investor Presentation

Middlesex receives barely greater than 50% of its income from residential prospects. Nonetheless, there are different classes, akin to business, contract gross sales, and fireplace safety, that contribute meaningfully to the corporate’s enterprise.

Given these built-in benefits, many utilities usually outperform different sectors of the market throughout recessions. Under are Middlesex’s earnings-per-share outcomes earlier than, throughout, and after the Nice Recession:

2006 earnings-per-share: $0.82
2007 earnings-per-share: $0.87 (6.1% improve)
2008 earnings-per-share: $0.89 (2.3% improve)
2009 earnings-per-share: $0.72 (19.1% lower)
2010 earnings-per-share: $0.96 (33.3% improve)

Middlesex’s earnings-per-share initially grew through the recessionary interval earlier than falling by a excessive double-digit quantity in 2009, exhibiting that the utility wasn’t utterly proof against the financial backdrop of the interval. One constructive was that income stayed comparatively flat for the 2008 to 2009 interval.

Considerably, the corporate rebounded in a considerable manner the very subsequent 12 months and set a brand new excessive for earnings-per-share. Development has primarily been in an uptrend since.

Valuation & Anticipated Complete Returns

Middlesex gained entrance into the Dividend Kings following the corporate’s dividend improve announcement on October twenty first, 2022. The corporate not too long ago raised its dividend by 4.6% and has now raised its dividend for 52 consecutive years. Middlesex at present yields 2.4%. The corporate has paid a steady dividend since 1912.

As beforehand talked about, we count on 4.6% EPS development per 12 months on common over the subsequent 5 years.

Lastly, the final part of complete returns might be valuation. Shares are at present buying and selling at 19 instances our earnings-per-share projection for the 12 months.

Given the corporate’s tailwinds and enterprise mannequin, we consider the honest worth is 20 instances earnings, which is in keeping with the common valuation of the inventory during the last decade. Reverting to our goal valuation by 2030 would lead to an annual return enlargement of 1.5%.

Subsequently, Middlesex is forecasted to return 8.5% per 12 months on common via 2020.

Last Ideas

There may be a lot to love about Middlesex, specifically its monopoly standing, the excessive success of charge improve approvals, and the lengthy historical past of dividend development. Solely essentially the most well-run companies will pay dividends for so long as Middlesex has.

That stated, the inventory is buying and selling at a good worth to its common historic valuation since 2014. Regardless of the attractiveness of the corporate and its dividend development streak, we consider buyers are higher off elsewhere, as forecasted returns over the medium time period are very weak. Thus, we suggest a “Maintain” on the present value.

Further Studying

The next databases of shares include shares with very lengthy dividend or company histories, ripe for choice for dividend development buyers.