Building Wealth Gloria Johnson is afraid to turn on the faucet.
As a mother of two living in Baltimore, she deals with the same responsibilities as most parents... helping her children with their homework, cooking, cleaning, and getting the kids to bed at a reasonable hour.
But her routine also includes something most of us don't have to worry about... boiling all her tap water.
As Johnson told NBC News, she sometimes gets brown water coming out of the tap. This is typically caused by the corrosion of pipes as materials flake into the water.
She's not alone. Baltimore has a widespread problem with its water infrastructure. And it has for a long time.
On September 5, 2022, residents of West and Southwest Baltimore – predominantly low-income areas – awoke to a "boil advisory" from the Department of Public Works. Tests found E. coli in the city's drinking water.
Residents were told to boil tap water before it was safe for drinking, washing dishes, bathing, and other regular activities. For five days, more than 1,500 residents scrambled to find clean water.
Baltimore officials eventually blamed the outbreak on a cascade of infrastructure failures.
This should have come as no surprise... Two months earlier, a 115-year-old storm drain made of stone collapsed in the city. This sinkhole forced the emergency demolition of five homes.
In February of that same year, a 48-inch water main, which was installed in 1925, was on the verge of ruining a dam holding up a large water reservoir. Rather than repair the water main, it was shut off. It had to be completely replaced, a project costing more than $100 million.
We could go on and on.
Baltimore's water system is decrepit. The average age of Baltimore's water mains is about 75 years.
Even though the city has received $2 billion over the past 20 years for water infrastructure, this money has barely made a dent. Baltimore needs a lot more money to get its systems into the 21st century.
One big problem is that Baltimore's water utility, Baltimore Water Enterprise, is struggling financially. Credit-rating agency Moody's Ratings recently downgraded its credit outlook to negative.
Moody's said Baltimore's water loss is sky-high at more than 25%. The city has been trying to upgrade its infrastructure and has passed much of those costs on to residents... Water bills in Baltimore roughly tripled from 2010 to 2022. And when low-income residents can't afford those higher rates, many simply don't pay.
This leaves Baltimore in no financial position to embark on a massive infrastructure project.
It's sad for us to write this, since our company's headquarters is in Baltimore. But by no means is this issue limited to Baltimore. It's all across the U.S.
The American Society of Civil Engineers ranks the nation's water infrastructure at a "C minus."
The agency reports that an estimated 6 billion gallons of treated water are lost each day. Somewhere in the country, a water main breaks every two minutes.
Much of the country's water infrastructure dates back 50 to 100 years. It's in dire need of renovation...
The U.S. Environmental Protection Agency estimates that water infrastructure will require more than $744 billion worth of repairs and upgrades over the next 20 years. And this is just to meet existing health and environmental standards.
That money is hard to come by for much of the country. Municipalities face tight budgets, the inability to raise capital, and the need to spend on much more than just water.
Clean water is essential to life. There's no substitute for it.
Like a lot of things throughout history, one answer can be to move water services away from cash-strapped municipalities to the private sector... And that's just what many governments have done around the country.
In the January issue of my Retirement Millionaire newsletter, my team and I recommended one of the largest for-profit water and wastewater utilities in the U.S. This company plans to invest many billions of dollars into the country's water infrastructure.
We see a huge opportunity for this investor-owned utility to scoop up and improve many struggling municipal water systems. And as the company continues to expand its operations, it's targeting to increase its dividend payments every year.
Now, buying a water utility isn't going to earn us any brownie points with our marketing department. This sector is as boring as it gets... The New York Times once said, "If your grandmother played the market, she probably invested in utilities for safety and income."
But I've been on a mission lately to prove to my subscribers that they don't need to take excessive risks in the markets to make great returns.
Sometimes investing can be as simple as buying a safe water utility... a company that is growing its operations and has an incredible dividend track record.
Since our recommendation of this boring water utility, its stock is up 14.4%. The S&P 500 Index is down 2.2% over that period...
We expect this outperformance to continue, too. You see, while the market is trading near all-time-high valuations, this water utility is trading near a seven-year-low valuation...
Most investors today are laser focused on exciting stocks that have exposure to AI. They don't care about reasonable valuations and generating income through dividend payments.
We do, though.
With the market near all-time highs and a potential drawdown looming, we know these are exactly the kind of stocks we need exposure to today. Because when times inevitably get tough, investors will do what they always do and turn to defensive sectors like utilities. And that'll push our water utility's price up even further.
We think this latest recommendation has the chance to crush the S&P 500 over the next several years... Plus, there's little risk with this stock.
It's a glaring buy at today's prices.
Retirement Millionaire subscribers can reread our January issue here.
And if you aren't yet a Retirement Millionaire subscriber, click here to see our latest offer.
What We're Reading...
- Baltimore's drinking-water supply is within federal standards but isn't necessarily safe.
- Water system upgrades could require more than $1 trillion over the next 20 years.
- Something different: AI cloud provider CoreWeave files for an initial public offering.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
March 5, 2025