The Motley Fool

This small cap is one of my favourite alternative investment ideas

The Duxton Water Ltd (ASX: D2O) share price is up 1.5% this morning to $1.37 after reporting its monthly NTA to the market last week.

Whilst the one month performance was a miniscule 0.02% NTA improvement, over the past 12 months it has delivered a 21.41% return. This is a very solid return for what is essentially a defensive business.

Duxton Water’s business model is to buy water entitlements and then lease them out for income. It can profit from the growth in value of the water entitlements and also the lease income.

The company has over $134 million invested in water entitlements, with 75% of that invested in the Murray region.

According to Duxton Water, conditions remain dry across much of the Murray Darling Basin. The impact of low seasonal rainfall has seen inflows to storages fall well short of long-term averages. With the lack of localised rainfall and higher temperature across the Basin, irrigators have brought forward irrigation use, drawing on held reserves.

Whilst some large-scale farms are well-supplied with water entitlements, smaller-scale farms that rely on rainfall are doing it tough. Whilst I have personally supported their plight with the various causes, it is Duxton Water (and other water entitlement holders) that are seeing the benefit of the crisis.

An added bonus with Duxton Water is its bi-annual dividend plan. It currently offers a partially franked dividend yield of 3.6%.

I like that with Duxton Water you own a small amount of fresh water – an increasingly important commodity. It is also an indirect investment in Australia’s agricultural sector.

Foolish takeaway

Duxton Water is currently trading at a slight premium to its reported NTA, however I think over the long-term it will be a good alternative asset to own.

Today is not as good a time to buy some shares as four months ago, but it may be worth buying a small parcel today and buying more on price weakness – I imagine water prices would fall temporarily if there is a rainy year.

Another growth share to keep your eye on is this exciting ASX share that is rapidly expanding.

Motley Fool Australia Issues Rare "Double Down" Buy Alert

Scott Phillips has stumbled upon a little-owned stock he believes could be one of the greatest discoveries of his 25 years as a professional investor.


This is your chance to get in early on of what could prove to be a very special investment recommendation. Think about how many investing trends you've missed out on, even though you knew they were going to be big. Don't let that happen again. This is your chance to get in early.

Simply click here to get started and access our secure sign-up page.

Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now