Water, water everywhere… and not a drop to drink.  Though the earth is 70.8% water, only 2.5% is potable freshwater, the majority of which can be found only in glacial ice.

This leaves less than 1% of the world’s water supply for its 6.87 billion human inhabitants, crops, and livestock.

Even worse, our tiny portion of the world’s water is becoming increasingly polluted and is consumed at unsustainable rates.

Fortunately, Paris based Veolia Environnement (NYSE: VE) has everything it takes to help us avoid the looming global water shortage and pad our portfolio.

With operations in 66 countries, Veolia provides water and wastewater management, transportation, and energy services to countries in desperate need of fresh water.

In fact, Veolia operates in all five countries considered to have the most potential for growth in the water and wastewater industry. And with roughly 20% of the world’s population, China is at the top of this list.

Currently water pollution plagues 90% of Chinese cities.

Luckily for the Chinese – and Veolia stakeholders – Veolia Water operates in 20 of 34 Chinese provinces and has contracts naming the company as the sole water supplier for 30 million Chinese citizens.

And the best part? These contracts aren’t just for 2009; some span up to 50 years!

Due to dire need for potable water and increasing infrastructure, Veolia can expect growth in China of up to 25% per year.

The Infrastructure Behind Water

Worldwide spending on the improvement and expansion of water infrastructure is forecasted to grow nearly 98% by 2016. And with the United States making up less than 4% of the total demand for infrastructure upgrades, water investors must think internationally.

Strengthened by its global reach and vertical integration, Veolia is the perfect opportunity.

The company is so large that its economies of scale allow it to create greater profits that its competitors and provide investors with a higher return.

Even in this year’s struggling economy, Veolia distributed its most impressive dividend in company history– at 5.74% of its share price.

Because of the difficulty small water companies face and growing costs associated with finding and treating freshwater, experts expect to see increasing consolidation in the industry.

Veolia’s positioning ensures that the company will remain a market leader throughout the market overhaul.

By aligning itself with equipment manufacturers, the company has built its own desalinization plants, giving Veolia control of its processes from the collection of wastewater to the servicing of end users.

Now, government stimulus packages all over the world are supplying billions for infrastructure upgrades ($90 billion in the US alone).

With gains of over 50% in the last six months, Veolia shareholders have had their appetites whetted … and are thirsty for more.

Source: Veolia Environnement SA (NYSE: VE): Stock of the Day

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