If there's any stock in the water utilities space that should have attracted the notice of investors, it's the Calvert fund's biggest water utility holding, American Water Works.
It's the largest water utility in the U.S. and serves customers in 30 states, though most of its business is in New Jersey and Pennsylvania, which both have attractive regulatory regimes, Sheldon said.
It's been the most impressive stock in the space, up more than 140 percent since its 2008 IPO, as well as every stock in its peer group—by 100 percent or more over five years. The stock has pulled back with the peer group this year as Federal Reserve interest-rate-hike fears have handicapped the utilities sector, but analysts believe that's provided another reason to give the stock a look.
"American and the other East Coast players are not trading where they could be on a valuation basis," Gaugler said. He said the interest-rate concerns that have hit the stocks miss one important sector dynamic: The water utilities can raise dividends to keep pace with rates, so even if the spread between their dividends and the 10-year Treasury narrows, yields can still be made attractive.
"Everyone thinks you need to get out when you really don't," Gaugler said.
California Water Service's current yield is 2.9 percent, versus 2.4 percent on the 10-year Treasury.
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Baird's Parker also likes American Water Works. The utility's 6 percent to 9 percent annual earnings growth is fueled by a number of strategies, including moving into non-regulated businesses, such as military base water services. The homeowner services business is another untapped market, Parker said. "The utility is on the cutting edge of expanding supply and growing its base," he said, including getting approval for a desalination plant in California.
Ladenburg Thalmann analyst Richard Verdi said, "In 2015 the best water utility bet is American Water Works."