California Water Service Boosts Dividend 8%, But Is the Stock Still a Buy?

California Water Service Group (NYSE: CWT), a regulated water utility serving communities across the state, announced an 8% increase to its annual dividend this week, marking its 324th consecutive quarterly payout. The move lifts the planned annual dividend to $1.34 per share, with a quarterly payment of $0.335 scheduled for February 20, 2026, to shareholders of record as of February 9.

The dividend hike underscores management's commitment to returning cash to shareholders, even as the company navigates a complex regulatory environment. California's ongoing General Rate Case proceedings and looming costs associated with PFAS (per- and polyfluoroalkyl substances) treatment pose significant financial uncertainties. These factors could pressure future earnings and the ability to sustain dividend growth if regulators disallow cost recovery through customer rates.

From a valuation perspective, the stock presents a mixed picture. Trading around $44.94, CWT appears undervalued against some long-term fair value estimates near $51.67, which are based on infrastructure investment and regulatory frameworks. However, its recent performance tells a story of volatility: shares are up over 5% in the past month but have declined nearly 21% over three years. Its current P/E ratio of 19.6x sits below the industry average but above what some models consider a "fair" multiple for the sector, suggesting a balanced view between value and risk.

Investor Voices:

Michael Torres, Portfolio Manager at Coastal Wealth Advisors: "For income-focused investors, CWT's track record is compelling. The dividend increase is a strong signal of stability in a sector known for its defensive qualities. The regulatory overhang is priced in, and the long-term thesis around essential water infrastructure remains intact."

Sarah Chen, Utility Sector Analyst: "The valuation disconnect is interesting. The market seems to be discounting the near-term regulatory risks heavily, perhaps too heavily. If the rate case resolves favorably, there's clear upside. But investors need to be patient and understand this is a long-game utility stock, not a growth rocket."

David R. Miller, Independent Investor (via financial forum): "This is a classic 'value trap.' A slightly higher dividend doesn't erase a 20% loss over three years! Regulators are squeezing utilities, and compliance costs will skyrocket. This dividend hike feels like a distraction from the fundamental pressures. There are better places for your money."

Rebecca Jones, Retired Teacher & Dividend Investor: "As a long-term shareholder, I appreciate the consistent income. Water is non-negotiable, and in California, it's a critical resource. The dividend increase helps offset inflation for me. I'm not looking for flashy gains; I'm looking for reliability, and CWT has provided that."