Dive into the Blue: Exploring American Water Works (AWK) as a Dividend Stock
Dividends are like the cherry on top of the investment sundae – the sweet reward for being a shareholder. But, as appealing as dividends can be, finding a great dividend stock is no easy task. One company that has been grabbing investors’ attention is American Water Works (AWK), the largest publicly traded U.S. water and wastewater utility company. Let’s take a closer look at AWK and see if it has what it takes to make it onto your dividend watchlist.
A Brief Overview of American Water Works
American Water Works, based in Camden, New Jersey, provides water and wastewater services to over 15 million people in 46 states and Ontario, Canada. The company has a long history of financial stability, having paid dividends for over 85 consecutive years. AWK’s business model is regulated, which means it enjoys steady revenue and predictable cash flows.
Financial Performance and Dividend History
American Water Works has a solid financial performance, with a strong balance sheet and consistent revenue growth. The company’s operating income has grown annually over the past five years, and its net income has grown for the past ten consecutive years. AWK’s dividend growth has been impressive as well, with an annual increase of over 7% for the past ten years.
Why American Water Works is a Great Dividend Stock
- Consistent Dividend Growth: AWK has increased its dividend for 86 consecutive years, making it a member of the prestigious Dividend Aristocrats Index.
- Regulated Business Model: AWK’s business model is regulated, which provides steady revenue and predictable cash flows.
- Essential Service: Water is an essential service, and demand for it is not going away. AWK’s business is recession-resistant and has low sensitivity to economic cycles.
- Strong Financial Position: AWK has a strong balance sheet, with a debt-to-equity ratio of 0.73 and a current ratio of 1.5.
How This Impacts You
As a shareholder of American Water Works, you stand to benefit from its consistent dividend growth and stable business model. With a current dividend yield of around 1.8%, AWK offers a reliable source of passive income. Additionally, the company’s regulated business model and essential service nature provide a degree of safety and stability in your investment portfolio.
How This Impacts the World
American Water Works’ impact on the world is significant, as it plays a crucial role in providing clean water and wastewater services to millions of people. The company’s commitment to sustainability and water conservation is also noteworthy. For example, AWK has implemented various water conservation programs and technologies to help its customers reduce water usage and save money. Moreover, the company’s investments in infrastructure improvements contribute to economic growth and job creation in the communities it serves.
Conclusion
American Water Works is a great dividend stock for investors seeking reliable income, stability, and long-term growth. With its consistent dividend growth, regulated business model, essential service nature, and strong financial position, AWK offers a compelling investment opportunity. Additionally, the company’s positive impact on individuals and communities by providing clean water and wastewater services makes it a socially responsible choice as well.
