How does American Water Works make money?

American Water Works

Relevant content in my book

For the relevant content in my book, I introduced the company American Water Works (ticker: AWK) in a special article in my book. The content in the book will not be repeated. Investors are invited to refer to my book “The Rules of 10 Baggers” Sections 3-8, 179 pages.


A Brief Introduction

The American Water Works Company, founded in 1886, is the nation’s premier water company; its primary business is to provide drinking water, wastewater and related water services to more than 14 million people in 24 states. American Water Works is a typical public utility listed company in the United States, which must accept the supervision of governments across the United States. Provides water and wastewater services in the United States through its subsidiaries. It provides water and wastewater services to approximately 1,700 communities in 14 states, serving approximately 3.4 million active customers.

Company’s assets

It also operate approximately 80 surface water treatment plants; 480 groundwater treatment plants; 160 sewage treatment plants; 52,500 miles of transmission, distribution and collection mains and pipelines; 1,100 groundwater wells; 1,700 water and sewage pumps stations; 1,300 treated water storage facilities; and 76 dams.

Revenue break-down

Revenue resources

State$Million % of Total revenue
New Jersey82624.40%

Revenue by type

Business performance and valuation

Business performance

Year 2021NextEra EnergyAmerican Water Works
Annual revenue and growth rate (million)17,069 -5.16%3,930 +4.05%
Annual operating income and growth rate (million)3,121 -39.35%1,274 -1.77%
Annual net income and growth rate (million)3,573 +22.4%1,263 +78.14%
Operating margin18.28%32.42%
Net margin20.93%32.14%

Stock valuation

7/23/2022NextEra EnergyAmerican Water Works
Market capitalization ($ billion)156.8727.03
Share price79.85148.71
Dividend yield2.13%1.76%
Stock performance in past 10 years (S&P 500 was+232%)+449%+232%

Long term investment metrics

Stock performance vs. S&P 500

CompanyMarket CapDividend YieldProjected Annualized EPS Growth Over Next 5 YearsStock’s 10-Year Total Return
NextEra Energy$139 billion2.4%8.9%449%
American Water Works$23.8 billion2%8.3%378%
S&P 500N/A1.47%N/A232%


Among the best stocks to consider buying now are dividend-paying shares of well-established, profitable companies that sell products and services customers need during both good and challenging economic times, including during recessions. Two such companies are U.S. water and wastewater utility giant American Water Works. 

American Water Works is the largest and most geographically diverse U.S. water and wastewater utility. It provides regulated utility services in 14 states and has a market-based business that provides services on military bases throughout the country.

The company was founded in 1886 and is poised to thrive well into the future. The beauty of regulated water utilities for investors is that they provide a product that is essential and has no substitutes, and they’re legal monopolies, so competition isn’t a concern.

American Water Works’ catalysts for growth include industry consolidation, the need for water system infrastructure upgrades throughout much of the country, and climate-change-induced rising temperatures.

The company has raised its dividend every year since it went public in 2008. Moreover, through 2026, management expects dividend growth to average at the high end of the 7% to 10% range.

American Water Works

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