Companies in the news: the water utilities

Water companies used to be reliable investments. Since they were privatised in 1989 they have cut costs and paid dividends to shareholders. But in recent years they have been squeezed by water regulator Ofwat.

Low bills for customers seem to be more important than dividends for shareholders, even though water firms need to attract investors to finance their businesses and protect their lenders from bearing too much risk.

Last week, Ofwat showed it was prepared to squeeze profits even harder. It reckons low interest rates mean that water firms can finance themselves more cheaply than before and so don’t have [...]

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