the giant German utility complex RWE swallowed the Works for the princely sum of $4.6 billion (plus assumed debt).

It was a classic case of an enthusiastic foreign buyer paying way too much for a supposed "crown jewel." RWE never made a satisfactory return on its money. In fact, less than three years after buying the Works, RWE decided to get rid of it. Talk about buyer's remorse!

It took a while, but RWE finally floated a public offering in late April for 40% of its stake in American Water. At the offering price, the entire company is now valued at $3.4 billion–a $1.2 billion bath for RWE, and an even bigger loss if you take into account the dollar's slide against the euro over the past five years.

Tough break. For smart investors, though, it has offered a perfect opportunity. American Water continues to be a well-run business, with ample scope to grow organically (more mouths drinking water every year) as well as via acquisition. I'm particularly intrigued with the prospects for industry consolidation since more than half the 53,000 community water systems in the United States serve a population of 500 or less.

At this early stage of its (second) public life, AWK is doling out a quarterly dividend of 20 cents per share for a current yield of about 3.7%. For my Profitable Investing subscribers I look for stocks that will provide regular annual increases at a rate that should easily exceed the cost of living. Hence, the stock fits the income-and-growth profile that many retirees and other conservative investors are looking for. As my subscribers are typically retirees looking to spend their golden years worry-free, I find reliable stocks like AWK are a match made in heaven.

Water, Water (Profits) Everywhere!

Are you really excited about water? If so, you might invest in the exchange-traded fund that covers the whole sweep of the industry that I'm recommending to Profitable Investing subscribers. In addition to water and wastewater utilities, this ETF includes pump, valve, tank, meter and filter manufacturers, as well as companies that build and install irrigation systems. Both domestic and foreign stocks are represented–an important feature of any well-rounded water portfolio nowadays, since so much of the industry's growth is taking place overseas in emerging markets. Last year, when many funds faltered, this stellar ETF returned 16.7% at market price. In 2006, the fund racked up an even better 22.2% return. Not bad for an industry based on the commonest raw material in the world. You might even call it pretty slick.

If you are ready to start profiting from this and other reliable investments, sign up today for your risk-free trial subscription to my Profitable Investing service! My recommendations for conservative investors have grown 900% since 1984! Don't miss out! Get started today!