Retire Rich with This Legal Monopoly
By Jim Nelson
June 3, 2009
Water is, by far, the most important element we need to survive. You can go a month without eating, but not even a week without water. Lack of adequate drinking water has killed almost 800,000 people this year. Now politicians are throwing billions of taxpayer dollars at water and wastewater systems.
Obama’s American Recovery and Reinvestment Act sets $126 billion aside for infrastructure projects. The majority of this is for roadwork and water infrastructure.
On top of that, $144 billion more is going to state and local governments. A large amount of that cash will be spent on these failing water systems. After all, we’ve already seen pipes burst throughout the country, and no one wants to be next governor on CNN trying to explain why the state didn’t fix its water pipes.
Right now, there are a handful of dividend producing water infrastructure stocks that are giving investors the chance to profit from this life-sustaining element. Better yet, one class of these companies has a secure government-sponsored monopoly. You can’t ask for a safer stream of income, and I’ve got my eye on one of these stocks specifically.
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But to understand the profit potential of these kinds of stocks, you should be caught up to speed on the background story…
Monopolizing the Last 0.3% of the World’s Most Precious Element
Of 6.7 billion people in this world, 1.3 billion don’t have access to safe drinking water. It seems odd considering we have a blue planet. Here’s how it works out…
96% of all water on this planet is found in the ocean - salt water. Another 3.7% can be found in icebergs, glaciers and the atmosphere. That leaves just 0.3%, or two million cubic miles, left in groundwater and freshwater lakes and rivers.
Imagine if just a few companies controlled that tiny amount of fresh water. Well, that’s exactly what we have.
You see, municipalities control about 85% of the total market. And you know they won’t allow any competition. The other 15% comes from investor-owned monopolies. Investors call these monopolies water utility companies.
Utilities in general have enormous advantages over regular corporations. Just like monopolies, they are the only provider of a service. There’s very limited or no competition to contend with. That makes them great investments.
The reason we love utilities so much is because in the income world, they are about the closest you can get to guaranteed dividends. Unless these companies are fiscally irresponsible, we are assured of steady income from a competition-free business.
Why Water is the Best Utility Investment
However, water utilities have an extra attribute other kinds of utilities do not. Natural gas can be transported through trucks and pipelines. So if one area is experiencing an extra-cold winter, it can get gas from other places. The same applies to electricity. It can flow through the grid from one area to another to stop blackouts before they happen. You just can’t do that with water.
If one area is suffering from a drought, it’s nearly impossible to bring enough water from elsewhere to make a difference. Transporting water is difficult. It costs way too much. Plus, the infrastructure is simply not in place. That’s why water utility companies can stake out a territory and monopolize the area.
We also love water utilities because they provide an absolute necessity. If you are really sick of high energy bills, you can put solar panels on your roof. If you don’t like your natural gas company, you can find another heating source. There’s no substitute for water. Unless you are willing to ship in an astronomical amount of bottled water or drill a well, you are pretty reliant on the water company.
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How much do you really even pay for water? It’s hardly anything at all. There’s very little chance you’d ever think to radically change your water supplier. The cost of drilling a well far exceeds any local municipality’s or utility’s fee. So you are stuck with one provider.
Demand certainly isn’t falling, either. There’s no recession or even depression that can cause someone to say, “I can do without water this month.” In fact, the amount of people this world needs to supply with water is only growing. To really spur a growth play, we need to look for areas that are growing the fastest.
A Liquid Investment
With scarcity, recession-resistance, and a bulletproof dividend stream, water utilities are a fantastic investment that can diversify your small-cap portfolio and add big gains to your bottom line.
Like I told you before, I’ve got my eye on one of these water utilities right now — in fact, I’ve already given that name to my Lifetime Income Report readers. If you want the chance to get in before this stock climbs above my “buy” window, just click here to learn more about the best dividend stocks on the market…
Sincerely,
Jim Nelson
