Climate change, shifting market forces, and new technological growth all contribute to the rising importance of desalination stocks.
The services these companies provides are necessary for human existence, making them a critical part of the global economy and a great addition to your ESG investment portfolio.
Desalination stocks, like many other energy sector and eco-friendly stocks, are well-positioned as both long-term and short-term investments to build wealth and turn your money into more money.
In this post, I’ll explore what desalination stocks are, the best desalination stocks, and much more. Let’s get started!
What Are Desalination Stocks?
Desalination is a technological process that involves eliminating impurities – but especially excessive salt – from water.
For example, desalination companies often take salty seawater and remove the salt through processes like reverse osmosis to make the water drinkable.
Desalination stocks are stocks that either specialize in desalination or derive some of their profits from desalination plants.
Some water desalination stocks prioritize desalination plant production and operation while others are for companies that perform a variety of eco-friendly processes, such as water treatment to remove toxins or waste.
Why Invest in Desalination Stocks?
Simply put, because desalination will become even more critical over the next few years as the global population grows and people need fresh drinking water.
Due to climate change, many regions are at a greater risk than ever before of drought, meaning their traditional sources of fresh water are drying up or otherwise becoming inaccessible.
Desalination plants can take plentiful seawater and remove the salt, making it perfect for drinking, watering crops, and other purposes.
Furthermore, widespread waste due to manufacturing and global emissions has led to the contamination of water sources such as rivers, lakes, and oceans.
These developments have contributed to global warming, polluted cities and populations, and other issues.
Many desalination companies operate in the areas of freshwater treatment and toxin removal, as well. These services help to restore natural habitats, provide clean water to people, and more.
With increased government attention on desalination, reducing carbon emissions, and pollutant removal, desalination stocks are at an all-time high in terms of price and importance.
Investing in desalination stocks now could help your portfolio see massive growth as these companies receive funding for further plant construction and technological research.
You can use many investing apps like Acorns or M1 Finance to get started investing in desalination stocks.
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11 Best Desalination Stocks
Now that you know why it’s a good idea to invest in desalination stocks, here’s a breakdown of 11 top water companies for your portfolio.
CWCO – Consolidated Water Co
Consolidated Water Co. Ltd. is a somewhat smaller company that both builds and operates its own water treatment and water supply plants. It also distributes fresh water to various people with a market cap of $150 million.
Consolidated Water is a big player in the desalination industry since it uses reverse osmosis desalination technology.
This generates completely potable water from seawater: a major means to provide freshwater to people as climate change and oceanic salinity shift over the next few years.
To date, Consolidated Water has built and operates 11 water production facilities throughout the Bahamas, Cayman Islands, and the British Virgin Islands.
It has a total water treatment capacity of over 25 million gallons. The company sends most of its desalinated water to government-owned distributors including commercial and residential customers.
Since Consolidated Water is tradable on the NASDAQ, it’s very easy to purchase and hold for potential gains for long-term investors.
Though it isn’t as large as some of the other desalination companies in the industry, it is profitable and currently pays dividends with a yield of 3.43%.
VEOEY – Veolia Environment S.A.
Veolia Environment S.A. is an energy and wastewater management company that offers services around the world.
With a current market cap of nearly $26 billion, it’s an important organization that manages both the production and delivery of fresh water to approximately 100 million people.
On top of that, Veolia provides wastewater services – such as removing contaminated water from living areas – to 61 million people in total.
At the time of this writing, Veolia operates almost 2300 different water treatment projects in over 100 countries. Thus, it’s not a 100% desalination stock. But desalination does play a major role in its operations and profits.
Veolia is known in the desalination industry since it has a total water purification capacity of about 13,000,000 m³ each day. For example, in 2020, Veolia supplied freshwater to approximately 95 million people.
Since Veolia builds lots of desalination plants of various sizes, it’s an important stock for those certain about the importance of desalination for freshwater and wastewater treatments of the future.
Acciona S.A. is one of the biggest water infrastructure businesses in the world.
Currently, it has a market cap of €9.1 billion and it is based in Spain rather than the US.
As a water manufacturing and delivery conglomerate, it is highly invested not only in desalination technology, but also in energy tech, finance, and more.
In terms of desalination, Acciona both designs and builds its own reverse osmosis desalination plants. These plants desalinate approximately 5,000,000 m³ each day. This is enough desalinated water for approximately 25 million people.
Importantly, Acciona’s reverse osmosis technology is a little less energy-intensive and more energy-efficient compared to other desalination plants, like thermal desalination plants. It also has a minimal carbon footprint, which could help Acciona become an even more important player in this industry.
Acciona’s water desalination plants are located in different countries, spreading out its infrastructure to prevent a major catastrophe if one area suffers an emergency.
ACXIF is a phenomenal choice for both long-term and short-term investors in desalination companies.
Energy Recovery Inc
Energy Recovery Inc. is an international company that both designs and builds technologies for companies that need industrial fluid flow solutions.
It has two primary segments: oil, then gas and water.
ERII focuses on creating energy recovery devices so that industrial companies can lower their energy expenses, thus receiving tax breaks and other advantages.
ERII began with a single water desalination plant using a PX Pressure Exchanger ERD device. This device uses the wasted energy from the seawater reverse osmosis desalination process to excellent effect, boosting energy efficiency for the plant overall. The device has been expanded to other plants thanks to its success.
As a result, this innovative company saves approximately $2.5 billion each year for its desalination clients. Since the devices are so efficient, they lower carbon emissions and don’t release greenhouse gases.
With a current market cap of approximately $1 billion, it’s an excellent long-term investment. However, all investors need a valid ID to invest in ERII stocks.
CWT – California Water Service
The California Water Service is a public utility company offering water services to 2 million people across 100 distinct communities.
With a headquarters in San Jose under the name Cal Water, it not only serves people in California but also citizens in states such as New Mexico, Texas, and Hawaii.
CWT might be an excellent desalination stock for investors who want to primarily put their money in American companies. The states CWT serves have large and growing populations, and most of them will require extensive water treatment and provision services in the near future as climate change raises their temperatures and as droughts become more frequent.
More importantly, 80% of CWT’s investments come from institutions with top-tier financial stability, liquidity, and capability. Ultimately, CWT might be one of the top desalination stocks for risk-averse investors.
American Water Works
American Water Works or AWK is a widely recognized and highly awarded company.
It owns and operates wastewater utilities as well as distributes desalinated, drinkable water to residential, industrial, and commercial customers across 24 US states.
As the largest public and treated water company, it is highly financially stable and has been consistently paying dividends to its investors for over 10 years. It’s a top-tier desalination stock if you want to start earning dividends from your investments sooner rather than later.
Even better, AWK’s dividends have increased consistently by 10% each year over the last eight years.
With a payout ratio of approximately 61%, AWK could serve as a great source of passive income. It’s likely to grow in importance and profits as desalination technology and water distribution become more critical over the coming years.
ACWA Power Co
With a market cap of 73 billion SAR, ACWA Power is a huge power generation and seawater desalination company located in Saudi Arabia.
It has different segments for its corporate operations, such as renewables, water, and thermal desalination. In the latter segment, it focuses on both the distribution and wholesale of desalinated water, as well as generating electricity via steam power.
To do this, ACWA Power has several of its own desalination plants.
Most of these use reverse osmosis technology, though others use older forms of desalination. In any case, the plants combined treat approximately 6,400,000 m³ of water per day.
The big question investors must ask is whether they are confident when investing in a Saudi Arabian company. Saudi Arabia has some severe economic restrictions, and it could prove to be less than stable country over the next few decades.
On top of that, ACWA Power doesn’t have a US listing.
That means investors will have to contact a share broker to both buy and trade foreign shares if they want to invest in ACWA Power.
Still, it could be a way to diversify your portfolio if you want to make sure you have your investment eggs in a variety of international baskets rather than one domestic basket.
Abengoa S.A. is another Spanish-based water and energy company with a current relatively small market cap of about $133 million.
At the time of this writing, Abengoa has operations in two distinct segments: engineering and construction and concession-type infrastructures. It offers different water desalination and energy solutions in areas like North and South America, Europe, Asia, and even the Middle East.
To date, Abengoa has made over 30 desalination projects across those regions.
These company-owned desalination plants make both industrial and drinking water.
The plants use advanced membrane desalination and seawater thermal desalination procedures, so the company isn’t quite as advanced as those that use reverse osmosis desalination.
Still, Abengoa manages to generate approximately 1,700,000 m³ of fresh water per day. The company is looking to expand in the future, targeting a desalination rate of 2,600,000 m³ of fresh water per day. This could mark Abengoa S.A. as a great desalination stock to invest in, as its value could skyrocket over the next few years if it meets its production goals.
SafBon Water Service
SafBon Water Service is a water treatment company located in China, exclusively providing desalinated water to those citizens.
This firm desalinates industrial wastewater: a major concern for the Chinese, as the company is heavily leaning into major manufacturing developments.
SafBon leverages lime technology to reclaim water, as well as membrane bioreactor technology. This helps to further reclaim wastewater and clear away the toxins and hazards in those water sources.
That’s not all. SafBon Water Service also uses ceramic flat membranes to help reduce pollutants such as particles and microorganisms in wastewater. The resulting freshwater is typically free of toxic biological hazards, enabling its use for a variety of needs.
SafBon has a current market cap of nearly $2.3 billion.
It has grown rapidly over the last few years, so it could be a great stock for investment if you are confident in the value of desalination technology in areas like China.
This is potentially an even more important investment as China is set to become more economically powerful over the next decade.
Hitachi Zosen Corporation
The Japanese company Hitachi Zosen Corporation has a market cap of US$133 billion at the time of this writing.
It designs, constructs, and then produces waste treatment plants, water and sewage treatment plants, and desalination plants around the world.
These multifaceted goals are achieved thanks to different operational segments, such as environment, machinery and infrastructure, and so on.
Desalination investors will be most interested to learn that Hitachi Zosen has constructed several water-related facilities like desalination plants and sludge recycling plants.
The most important of these are the fast-track emergency containerized saline water desalination plants. As the name suggests, these plants can be moved anywhere in the world based on the company’s current clients.
Hitachi Zosen currently owns shares in Osmoflo, which is another important company for desalination treatment. Osmoflo is something of a subsidiary to Hitachi Zosen, though it’s not official.
Hitachi Zosen Corporation could be a good desalination stock for diversifying your portfolio.
Since freshwater demands are likely to rise in the eastern hemisphere, odds are Hitachi Zosen will be well-positioned to provide solutions for those needs should it continue to develop fast-track emergency saline water desalination services for rapid responses.
Doosan Heavy Industries & Construction Co., Ltd.
Doosan Heavy Industries is a massive conglomerate with a market cap of 9.33 T USD.
Based in South Korea, it has a very diverse portfolio in terms of water treatment technologies.
These technologies include multistage flash or MSF, multi-effect distillation or MED, and reverse osmosis or RO technologies.
After Doosan Heavy Industries won a $204 million desalination project in 2018, it expanded its operations into the Middle East. Right now, Doosan Heavy Industries is one of the most important leaders in water purification and wastewater treatment technologies for both the infrastructure and industrial markets.
It’s currently focused on offering desalinated water both for the needs of individual citizens and massive companies.
Doosan Heavy Industries could grow quite rapidly in the near future, especially if it works to provide many Chinese and other Asian citizens with fresh water in conjunction with other desalination companies.
Final Thoughts on the Best Desalination Stocks
Desalination stocks are great vehicles to grow your wealth and stabilize your portfolio for future success.
As desalination becomes more and more important, the above companies may very well see their value rise as well – investing in them now, when many of them are likely at their most affordable points, could be the smartest thing you can do for your investments.
Consider each of the above stocks in turn and choose the ones that seem to best fit your needs!
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