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Today we’re diving into a business everyone uses but no one talks about.
It might be one of the most essential companies you could ever own, providing something no one can live without.
Today we’re looking at American Water Works.
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It has massive scale, serving 14 million people across 24 states with 55,000 miles of pipes.
It operates as a legal monopoly in its service areas, meaning customers have no other choice.
American Water Works also buys up small, struggling municipal water systems and folds them into its giant network to continue growing.
But it’s facing some headwinds:
New PFAS environmental regulations are forcing them to spend billions on new filters.
High interest rates make it more expensive to borrow money for all those pipes.
Getting permission from the government to raise prices (rate cases) can take a long time.
With a decade of growth and a 10-year investment plan worth $48 billion, is this boring utility a buy?
Let’s find out!
American Water Works
Company name: American Water Works Company, Inc.
✍️ ISIN: US0304201033
🔎 Ticker: AWK
📚 Type: Dividend Growth Stock
📈 Stock Price: $139
💵 Market cap: $26.9 billion
📊 Average daily volume: $230 million
Don’t know American Water Works?
Here are the basics (click on the picture to expand):
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Dividend Score
American Water Works receives a Dividend Score of 4/5.
Now let’s dive into the full investment case!
1. Do I understand the business model?
American Water Works is the largest private water and wastewater utility in the United States.
Its business is simple: it owns the treatment plants and the pipes that bring water to your house and take wastewater away.
Because it’s a utility, the government gives it exclusive rights to serve certain areas, and in exchange, the government decides how much the company is allowed to charge.
Revenue Split
The vast majority of money comes from regulated water services.
Here is the split for fiscal year 2025:
Regulated Water Services: $4.23B (82.3% of revenue)
Regulated Wastewater Services: $422M (8.2% of revenue)
Other Regulated Revenue: $68M (1.3% of revenue)
Non-Regulated (Military Services): $417M (8.2% of revenue)
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