American Water raises dividend by 8.2%

CAMDEN, N.J. - American Water Works Company, Inc. (NYSE: AWK), the largest regulated water and wastewater utility in the United States, announced an 8.2% increase in its quarterly cash dividend. The board of directors declared a dividend of $0.8275 per share of common stock, aligning with the company’s previously stated guidance of 7 to 9 percent growth in earnings per share (EPS) and dividends. This marks the company’s 11th consecutive year of dividend increases, with an impressive track record of maintaining payments for 18 years, according to InvestingPro data.

John Griffith, President of American Water, emphasized the company’s commitment to delivering value to shareholders through dividends, which he described as a core component of the firm’s strategic initiatives. American Water anticipates maintaining its dividend growth within the 7 to 9 percent range over the long term, targeting a dividend payout ratio of 55 to 60 percent of earnings. The company’s current dividend yield stands at 2.1%, supported by strong revenue growth of 10.63% over the last twelve months.

The new dividend is scheduled to be paid on June 3, 2025, to shareholders of record as of May 13, 2025. Additionally, the company offers a dividend reinvestment and direct stock purchase plan known as American Water Stock Direct, which allows for reinvestment of cash dividends and additional share purchases without brokerage commissions or service charges.

American Water, with a heritage dating back to 1886, serves over 14 million people across 14 states and 18 military installations. Employing approximately 6,700 professionals, the company leverages its national scale to provide reliable water and wastewater services.

The announcement reflects the company’s consistent performance and strategic financial management, positioning it as a benchmark for dividend growth within the industry. The information is based on a press release statement from American Water and enhanced with comprehensive financial metrics from InvestingPro, where investors can access detailed analysis and additional insights through the Pro Research Report.

In other recent news, American Water Works Company has been the focus of various analyst reports and corporate developments. The company reported significant infrastructure investments through its subsidiary, Pennsylvania American Water, totaling over $675 million for 2024. This investment, aimed at upgrading water and wastewater systems, is expected to generate over 10,125 jobs and improve service reliability across 37 counties. Meanwhile, UBS maintained a Buy rating with a $156 target, highlighting potential benefits from legislative changes in Missouri that could enhance the company’s operational efficiency.

Barclays, however, initiated coverage with an Underweight rating, citing concerns about American Water’s valuation and potential EPS downside by 2026. Jefferies also maintained an Underperform rating, although it raised the price target to $115, noting a cautious outlook due to a projected EPS headwind in 2026. In corporate news, Kimberly J. Harris, a board member since 2019, resigned for health reasons, leaving a vacancy the company plans to fill soon.

These developments reflect a mix of strategic investments and analyst perspectives on American Water’s financial outlook. The company’s ongoing initiatives and legislative changes could impact its future performance, as noted by UBS’s positive outlook. However, the cautious views from Barclays and Jefferies highlight potential challenges in the coming years.

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