When I was at a BBQ yesterday, one of the guys there started talking investments with me. He is about to turn 65 but has already retired with several rental properties; a very smart individual who decided to imparted a few lessons upon me during our conversation.

First, he couldn’t stress the importance enough about making investments in solid companies that paid dividends and making sure to automatically reinvest the dividends. To put some perspective on this recommendation: “Between 1926 and 2004, dividends represented approximately 42% of the total return delivered by the S&P 500. Over that
same span, it’s been calculated that $1,000 invested in the S&P would have grown to $2.3 million if reinvested dividends are included, but only $90,000 without the dividends.” While there is a “lot to be said for a capital gain play,” (betting on an increase in stock price) the dependability of a dividend coming in on a regular basis is something that should be important to new, mid-level, and end-game investors.

Second, start as early as possible; putting off investing isn’t an alternative. When I told him that I was putting 16% of my salary plus the 6% match into my 401K AND already had a ROTH IRA, he said that it was a very wise decision. Coming from someone in his position, I considered it a large compliment. Hopefully, I’ll be sitting in his position someday giving that same comment to a young investor.

After getting past the first two key recommendations, we started talking about long term growth strategies. We both agreed that there were many opportunities out there but he brought up an important one that I wasn’t fully aware of. The water industry. Pure and simple, he pointed out that the water industry would play a role of epic proportions in the world’s future; that’s why my morning’s work has been dedicated to researching the water industry. My findings thus far have been pretty interesting and moreover, disturbing.

Some Quick Statistics:
-There are ~34,000 cubic kilometers of available freshwater in the world (~3% of the world’s water)
-There would be enough water for the entire population of the world if this water was evenly distributed across the planet.
-The water isn’t evenly distributed across the planet.
-Our planet has a growth rate of ~80 million per year; this increase requires an additional ~64 BILLION cubic meters of water per year
-By 2025, 48 countries with ~3 billion inhabitants will face water shortages
-By 2050, 54 countries with ~4 billion inhabitants will face water shortages; this translates into 40% of the projected population of 9.4 billion people.
-40% OF THE WORLD POPULATION WILL FACE WATER SHORTAGES IN 2050. 40 PERCENT!!!
-Contaminated water kills more people in Africa than AIDS. (The AIDS epidemic is a huge issue, this is even bigger)

What can we do to help? Can we make an impact? And…ok, I’ll ask the evil and, in this case, absolutely secondary question… How can we profit?

Water Desalination, the act of turning sea water into clean drinking water, can be accomplished. There are currently ~7,500 desalting plants in the world. 57% are in the Middle East and 12% are in the Americas. Water Desalination International, INC. has a facility that can produce 6.5 million gallons of the highest quality water in the world every day. There have even been discussions of nuclear powered desalination facilities, a pilot plant has been created and is being tested in Russia according to wikipedia.

If you’re a savvy investor, you should be looking into investing in the water industry via independent companies or through the newly formed water ETF PHO. Your investment will help fund the expansion of companies that are helping to expand infrastructure that combats the water problems that our world will face in the future and if you do, you’ll have not only that peace of mind, but a healthy boost to your portfolio for doing so.

Thanks to Will for turning me onto this.

Additional Information:
Investing Through DRIPs : Fool.com
A Head Start : pwausa.com
-This article stresses the importance of the presence of dividend paying stocks in a well diversified portfolio
Dividend paying vs Non-Dividend paying stocks : gotapex forum
Got Water? The New Liquid Investment
Freshwater: Lifeblood of the Planet