Bell Potter just initiated coverage on this ASX utilities stock with a buy recommendation

ASX utilities stock Rivco Australia Ltd (ASX: RIV) is in focus today. The team at Bell Potter have just initiated coverage on it, with a positive outlook. 

Company overview

Rivco Australia is provides investors with exposure to the Australian water market.

As of February 2026, Rivco owns 58.8 gigalitres (GL) of water entitlements. These assets are worth about $1.79 per share before tax (or $1.62 per share after tax). Around 80% of the portfolio value is in high-security water rights, mainly located in the Southern connected Murray–Darling Basin.

Rivco makes money in three main ways:

• Leasing its water entitlements to farmers and others (about 53% of its portfolio is currently leased, with an average lease length of 3.2 years).
• Selling extra yearly water allocations in the spot market.
• Selling water entitlements if their market value rises above what Rivco paid for them.

It has recently moved to an internal management structure, which should reduce operating costs and management fees going forward.

In the last 12 months, this ASX utilities stock has risen almost 11%. 

This has slightly outperformed the S&P/ASX 200 Index (ASX: XJO) which is up just over 9% in that same span. 

Why this ASX utilities stock is an attractive buy

In a report from Bell Potter yesterday, the broker said over the past decade Southern Murray–Darling Basin entitlements have delivered average annual cash yields of 3.5% p.a. It has also delivered capital returns of 10.0-12.0% p.a. with periods of outperformance tied to permanent cropping development. 

The broker said over the past five years capital returns have been more modest, however, a period of Government buybacks (~160GL over 5yrs and 230GL slatted for purchase) and modest expansion in tree nut planting (+1.3% p.a.) may trigger a return to higher levels of capital growth.

Buy recommendation

Bell Potter has initiated coverage on this ASX utilities stock with a buy recommendation, along with a price target of $1.65. 

From yesterday’s closing price of $1.50, that indicates 10% upside. 

RIV enters FY26 with the highest level of contracted revenue and available allocation in five years supporting a positive near term earnings outlook. In addition, with rising lease rates (+40bp YoY and 5-6% implied yields in current market offers) we see the scope to lift the portfolio return as leasing and re-leasing opportunities emerge (which should emerge as a theme from 2H28e). 

At the asset level, we see the shift in aligning future dividends with operating earnings as potentially moving group strategy to sustain and grow the asset base.

The post Bell Potter just initiated coverage on this ASX utilities stock with a buy recommendation appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.