Enjoying predictable regulated returns, the UK's remaining listed water companies have long been a haven for income investors. But as the industry battles an increasingly tough regulatory outlook, accompanied by the resurgent threat of nationalisation, Pennon (PNN) offers a little more than the typical utility. While South West Water remains the group’s backbone, its waste management business, Viridor, has emerged as the engine of growth.
IC TIP:
Buy
at
904p
Tip style
Income
Risk rating
Medium
Timescale
Long Term
Bull points
Yield and dividend growth
Water's sector-leading returns
Value of waste management arm
Bear points
Tougher regulatory regime from 2020
Vague threat of nationalisation