(MONEY Magazine) – If someone offered you an extremely low-risk way to earn at least 9% a year, you'd probably tell them they were all wet. But that's more or less what you get from one oft-overlooked stock group: water companies. "Water is the only utility that's still a true monopoly," says analyst Jim Krekeler at Edward D. Jones in St. Louis. By contrast, competition is increasing for electric utilities as companies start selling power outside their own territories. Similarly, natural gas distributors are suffering from competition as the large pipelines offer gas directly to big commercial customers. And local telephone companies face fierce rivalry from cable television and cellular telephones. But it's another story for water. "To sell water, you have to have a local source and a reservoir -- so there's almost no competition," Krekeler notes. The result is that water companies can deliver exceptionally predictable returns -- just as AT&T did before the telephone monopoly was broken up in 1984. Equally important, the water business has an excellent growth outlook. Environmental legislation that requires water companies to upgrade the quality of drinking water will favor large publicly traded firms with the economic resources to build purification facilities. Though there are more than 59,000 water utilities in the United States, "Most of them are small firms owned by municipalities or privately held," says Krekeler. "The big, publicly traded companies will grow by acquiring them." The bottom line: Over five years or so, shares of water companies will be able to offer safe dividend yields of as much as 7% and average annual price gains of at least 2% or 3%. That works out to an average total return to shareholders of at least 9% a year. The biggest is American Water Works (symbol: AWK; NYSE, $26.50; 4.1%), which owns 25 water companies serving some 6 million customers in 21 states and has annual revenues of about $750 million. "American is the stock most investors should concentrate on," says analyst Edward Tirello at NatWest Securities in New York City. "Although the stock pays only a 4% yield, the company can raise dividends as much as 7% a year." Since share prices for utilities rise over time roughly in line with dividends, that translates into an average total return of about 11% a year. For investors who want high current income, Krekeler likes Philadelphia Suburban (PSC; NYSE, $18.25; 6.1%), which provides water to 247,000 customers in the greater Philly area and has annual revenues of just over $100 million. He figures dividends could grow about 3% annually; at that rate, the stock could provide an average total return of just over 9% a year. For even higher income, Richard C. Young, president of Young Research & Publishing in Newport, R.I., recommends Consumers Water (CONW; NASDAQ, $16.75; 7%). The company serves 215,000 customers in six states in the Northeast and Midwest and has annual revenues of $92 million. Even though the stock offers dividend growth of only 2% a year, its lofty yield makes it appealing. "Consumers Water is a good way to get rich slowly," says Young. "If you'resaving for retirement, it beats bonds, where payouts don't grow at all."