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Is the Duxton Water share price a buy?

Tristan Harrison

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.

One of these great ASX shares could create even better investment returns for my portfolio from today.

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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.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019