Watts Water Technologies: Strong Cash, Stronger Dividends
Stable profitability and a fortress balance sheet fuel Watts Water’s 17.8% dividend CAGR.
Watts Water Technologies (NYSE: WTS) is a high-quality U.S. industrial company combining strong fundamentals with consistent and accelerating dividend growth. With 13 consecutive annual dividend increases and a five-year average growth rate of 17.8%, Watts stands out as a reliable dividend compounder. We added WTS 0.00%↑ to our Dividend Hike Portfolio early May and have since made a 14.6% return on this investment.
🔑 Key Points
Watts Water has raised its dividend for 13 consecutive years, averaging 17.8% annual growth over the past five years.
The company ended 2024 with a $186 million net cash position and maintains high ROIC (18–21%) and EBIT margins (18–19%).
Shares trade near all-time highs at $240, with a 2025 P/E of 26 and a YTD gain of 18.5%.
The company ended 2024 with a net cash position of $186 million, giving it a rare debt-free balance sheet. Despite trading near all-time highs around $240, the stock remains moderately valued with a 2025 forward P/E of 26. Backed by long-term trends in water efficiency, energy conservation, and infrastructure resilience, Watts continues to deliver rising shareholder value—making it a strong candidate for any dividend growth portfolio.
Watts Water Technologies, Inc. WTS 0.00%↑ is a global provider of flow control, water safety, water filtration & treatment, drainage, and PEX plumbing products. Founded in 1874, the company designs, manufactures, and sells solutions that help manage and conserve the flow of fluids and energy in commercial and residential buildings.
Portfolio Overview
Flow Control & Protection: including backflow preventers, water pressure regulators, temperature & pressure relief valves, thermostatic mixing valves, and leak detection systems.
HVAC & Gas: commercial high-efficiency boilers, water heaters, custom hot water solutions, hydronic and electric heating systems, hydronic pump groups, and flexible stainless‑steel connectors.
Drainage & Water Reuse: drainage products and engineered rainwater harvesting solutions.
Water Quality: point-of-use and point-of-entry water filtration, monitoring, conditioning, and scale prevention systems.
Market Position and Growth Outlook
Watts operates in global building and infrastructure markets, aligned with structural trends in water efficiency, safety, energy conservation, and sustainability. The company’s diversified offering across four product categories provides consistent exposure to both renovation and new-build demand.
In fiscal 2024, revenue grew by 9.5% to $2.25 billion. Looking ahead, analysts expect a slower growth trajectory with average annual revenue increases of around 3%.
Despite the expected moderation in topline growth, Watts stands out for its strong balance sheet. As of the end of 2024, the company had a net cash position of $186 million, effectively making it debt-free on a net basis. In fact, Watts continues to generate hundreds of millions in free cash flow annually—more than enough to fund capital needs and a rising dividend.
We are particularly impressed by Watts’ financial strength. Return on invested capital (ROIC) has consistently ranged between 18% and 21% in recent years. EBIT margins have remained stable between 18% and 19%, reflecting pricing power and operational efficiency.
Valuation and Share Performance
The stock trades near its all-time high at $240, but with a forward P/E ratio of 26 for 2025, it is not excessively valued for a business of this quality. Year-to-date, the stock has gained 18.5%, and since its purchase at $211.58 for the dividend portfolio, it has delivered a 14.6% unrealized return.
Dividend Growth
Watts has now increased its dividend for 13 consecutive years. Over the last five years, the average annual dividend growth rate has been a strong 17.8%. In 2025, the dividend was again raised by over 20%, underlining the company’s commitment to returning capital to shareholders. Despite these increases, the payout remains well-covered and backed by strong and growing free cash flow.
FACT: Watts Water Technologies is one of our Dividend Heroes in 2025
Based on its steady fundamentals, balance sheet strength, and consistent double-digit dividend growth, Watts Water Technologies earns a place in our Dividend Hike portfolio.
Summary
Business: global provider of essential water- and energy-control systems.
2024 revenue: $2.25 billion (+9.5%).
Outlook: ~3% annual revenue growth expected.
Profitability: ROIC 18–21%, EBIT margin 18–19%.
Balance sheet: net cash position of $186 million (end 2024).
Dividend: 23 consecutive annual increases; 17.8% 5Y CAGR; >20% hike in 2025.
Valuation: P/E 26 (2025), all-time high at $240.
Performance: +18.5% YTD, +14.6% since portfolio entry.
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.