American Water Works Company, Inc. (AWK)

Water is the most fragmented of the utility sectors: thousands of systems belong to municipalities that lack the money to replace mains laid a century ago or to meet tightening quality rules. The company buys such systems, invests capital in them and recovers that investment through tariffs.

Hence growth rare for a regulated business: it comes not from rising consumption — which is in fact falling as appliances get more efficient — but from expanding the footprint and upgrading it. Demand is completely inelastic and bills are small relative to a household budget. Risks: state commission decisions, borrowing costs and new water quality standards. The company pays a dividend.