Is the Duxton Water share price a buy?

Is the Duxton Water Ltd (ASX:D2O) share price a buy?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is the Duxton Water Ltd (ASX: D2O) share price a buy?

Duxton Water is supposedly a unique business not just on the ASX but supposedly it's the only one of its type in the whole world.

The idea behind Duxton Water is to own water entitlements and lease them out to agricultural businesses. Duxton Water shareholders benefit from both the lease income of the water and (hopefully) the capital growth of the entitlements.

According to Duxton Water, it has delivered total returns of 26.99% over the past year which is based on the net asset value (NAV) growth and franked dividends paid.

Duxton Water has also decided to show its earnings per share (EPS) in the year to date (YTD) for the four months from 1 January 2019 to 30 April 2019. It said that it has generated EPS of 3.4 cents to April 2019 compared to 8.5 cents for the whole of 2018.

The water company has successfully completed a capital raising which raised $15 million at $1.48 per share.

For April 2019 Duxton Water generated a return of 1.47% and it finished the month with a post-tax NAV of $1.50 and a pre-tax NTA of $1.64. Compared to the current share price of $1.52 these numbers are fairly attractive, although it's preferable to buy things at a discount to the pre-tax value.

Foolish takeaway

Duxton Water is proving to be a good way to get indirect exposure to the agricultural sector and the Duxton Water dividend continues to grow every six months. It seems like a pretty good defensive share that provides different returns to the market – a wet year could be bad.

I think Duxton Water could be a good ASX share to own for the long-term, but I'm not jumping to buy shares right now.

Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO. The Motley Fool Australia has recommended DUXTON FPO. 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.

More on Defensive Shares

Men standing together and defending the goal post symbolising defensive shares.
Defensive Shares

4 defensive ASX shares to own in a greedy market: Macquarie

These experts reckon the ASX's record highs won't last...

Read more »

Two mature women learn karate for self defence.
Defensive Shares

2 defensive ASX income shares I think investors should consider buying for bumper returns!

These stocks could offer defence and good returns.

Read more »

Defensive Shares

The pros and cons of buying Telstra shares right now

Is this an opportunity calling?

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Defensive Shares

My 2 favourite ASX utility shares for January 2024

These stocks could provide a good mixture of defence and growth.

Read more »

safe dividend yield represented by a piggy bank wrapped in bubble wrap
Defensive Shares

Weathering market storms: Dividend stocks in Australia as a safe harbour

Defensive earnings could help provide stability.

Read more »

safe dividend yield represented by a piggy bank wrapped in bubble wrap
Defensive Shares

Here's my recommendation for safe ASX shares to buy in December 2023

I think these stocks could be two leading defensive picks.

Read more »

Men standing together and defending the goal post symbolising defensive shares.
Defensive Shares

5 top defensive ASX shares for turbulent times

These stocks could be long-term defensive winners.

Read more »

a child dressed in army fatigues lies on the ground in his backyard wearing leaves and branches on his head as camouflage and peering through a pair of binoculars in a soldier pose.
Defensive Shares

Searching for defensive ASX shares? Here's what I look out for

Not all defensive companies make for good investments.

Read more »