{"id":10432,"date":"2022-07-29T23:56:00","date_gmt":"2022-07-29T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=10432"},"modified":"2025-05-27T15:30:48","modified_gmt":"2025-05-27T07:30:48","slug":"american-water-works","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/","title":{"rendered":"How does American Water Works make money?"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Relevant_content_in_my_book\" >Relevant content in my book<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Introduction\" >Introduction<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#A_Brief_Introduction\" >A Brief Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Companys_assets\" >Company&#8217;s assets<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Revenue_break-down\" >Revenue break-down<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Revenue_resources\" >Revenue resources<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Revenue_by_type\" >Revenue by type<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Business_performance_and_valuation\" >Business performance and valuation<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Business_performance\" >Business performance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Stock_valuation\" >Stock valuation<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Long_term_investment_metrics\" >Long term investment metrics<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Stock_performance_vs_S_P_500\" >Stock performance vs. S&amp;P 500<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Dividends\" >Dividends<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Relevant_content_in_my_book\"><\/span>Relevant content in my book<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>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 &#8220;<a href=\"https:\/\/www.books.com.tw\/products\/0010935641?sloc=main\" target=\"_blank\" rel=\"noreferrer noopener\">The Rules of 10 Baggers<\/a>&#8221; Sections 3-8, 179 pages.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span>Introduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Brief_Introduction\"><\/span>A Brief Introduction<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The American Water Works Company, founded in 1886, is the nation&#8217;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. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Companys_assets\"><\/span>Company&#8217;s assets<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>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.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Revenue_break-down\"><\/span>Revenue break-down<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Revenue_resources\"><\/span>Revenue resources<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>State<\/td><td>\uff04Million<\/td><td>&nbsp;% of Total revenue<\/td><\/tr><tr><td>New Jersey<\/td><td>826<\/td><td>24.40%<\/td><\/tr><tr><td>Pennsylvania<\/td><td>770<\/td><td>22.80%<\/td><\/tr><tr><td>Missouri<\/td><td>349<\/td><td>10.30%<\/td><\/tr><tr><td>Illinois<\/td><td>340<\/td><td>10.00%<\/td><\/tr><tr><td>California<\/td><td>268<\/td><td>7.90%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Revenue_by_type\"><\/span>Revenue by type<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"754\" height=\"454\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/07\/image-1.png\" alt=\"\" class=\"wp-image-12469\" srcset=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/07\/image-1.png 754w, https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/07\/image-1-300x181.png 300w\" sizes=\"auto, (max-width: 709px) 85vw, (max-width: 909px) 67vw, (max-width: 984px) 61vw, (max-width: 1362px) 45vw, 600px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Business_performance_and_valuation\"><\/span>Business performance and valuation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Business_performance\"><\/span>Business performance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Year 2021<\/td><td>NextEra Energy<\/td><td>American Water Works<\/td><\/tr><tr><td>Annual revenue and growth rate (million)<\/td><td>17,069 -5.16%<\/td><td>3,930 +4.05%<\/td><\/tr><tr><td>Annual operating income and growth rate (million)<\/td><td>3,121 -39.35%<\/td><td>1,274 -1.77%<\/td><\/tr><tr><td>Annual net income and growth rate (million)<\/td><td>3,573 +22.4%<\/td><td>1,263 +78.14%<\/td><\/tr><tr><td>Operating margin<\/td><td>18.28%<\/td><td>32.42%<\/td><\/tr><tr><td>Net margin<\/td><td>20.93%<\/td><td>32.14%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stock_valuation\"><\/span>Stock valuation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>7\/23\/2022<\/td><td>NextEra Energy<\/td><td>American Water Works<\/td><\/tr><tr><td>Market capitalization ($ billion)<\/td><td>156.87<\/td><td>27.03<\/td><\/tr><tr><td>Share price<\/td><td>79.85<\/td><td>148.71<\/td><\/tr><tr><td>P\/E<\/td><td>108.40<\/td><td>20.01<\/td><\/tr><tr><td>Dividend yield<\/td><td>2.13%<\/td><td>1.76%<\/td><\/tr><tr><td>Stock performance in past 10 years (S&amp;P 500 was\uff0b232%)<\/td><td>+449%<\/td><td>+232%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Long_term_investment_metrics\"><\/span>Long term investment metrics<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stock_performance_vs_S_P_500\"><\/span>Stock performance vs. <strong>S&amp;P 500<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th><strong>Company<\/strong><\/th><th><strong>Market Cap<\/strong><\/th><th><strong>Dividend Yield<\/strong><\/th><th><strong>Projected Annualized EPS Growth Over Next 5 Years<\/strong><\/th><th><strong>Stock&#8217;s 10-Year Total Return<\/strong><\/th><\/tr><\/thead><tbody><tr><td><strong>NextEra Energy<\/strong><\/td><td>$139 billion<\/td><td>2.4%<\/td><td>8.9%<\/td><td>449%<\/td><\/tr><tr><td><strong>American Water Works<\/strong><\/td><td>$23.8 billion<\/td><td>2%<\/td><td>8.3%<\/td><td>378%<\/td><\/tr><tr><td><strong>S&amp;P 500<\/strong><\/td><td>N\/A<\/td><td>1.47%<\/td><td>N\/A<\/td><td>232%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Dividends\"><\/span>Dividends<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Among the best stocks to consider buying now are&nbsp;dividend-paying&nbsp;shares of well-established, profitable companies that sell products and services customers need during both good and challenging economic times, including during&nbsp;recessions. Two such companies are U.S. water and wastewater utility giant&nbsp;American Water Works.&nbsp;<\/p>\n\n\n\n<p>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.<\/p>\n\n\n\n<p>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&#8217;re legal monopolies, so competition isn&#8217;t a concern.<\/p>\n\n\n\n<p>American Water Works&#8217; catalysts for growth include industry consolidation, the need for water system infrastructure upgrades throughout much of the country, and climate-change-induced rising temperatures.<\/p>\n\n\n\n<p>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.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"308\" height=\"71\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/07\/a-4.jpg\" alt=\"American Water Works\" class=\"wp-image-12440\" srcset=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/07\/a-4.jpg 308w, https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/07\/a-4-300x69.jpg 300w\" sizes=\"auto, (max-width: 308px) 85vw, 308px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/\" target=\"_blank\" rel=\"noreferrer noopener\">Duke Energy, representative of monopoly energy companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/27\/vistra-a-turned-around\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why did US largest electricity Vistra, a turned around company, share return higher than Nvidia?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/01\/18\/nextera-energy\/\">How does Renewable Energy Giant NextEra Energy make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/08\/31\/waste-management-wm\/\" target=\"_blank\" rel=\"noreferrer noopener\">Quasi-monopoly Waste Management (WM)<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/\">How does American Water Works make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/\" target=\"_blank\" rel=\"noreferrer noopener\">Considerations as a dividends investor<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/10\/08\/dividend-rich-industries\/\" target=\"_blank\" rel=\"noreferrer noopener\">Dividend-rich industries and 6 big differences from Taiwan<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/22\/why-do-more-and-more-u-s-technology-stock-companies-tend-not-to-pay-dividends\/\">Why dividends disappeared suddenly these years?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/09\/29\/the-most-two-serious-killers-to-investors-inflation-and-interest-rate\/\">Tax, inflation and rate are the top three serious killers to investors<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/02\/coca-cola-has-been-inferior-to-pepsi-in-and-even-return-rate-is-negative-in-past-10-years\/\">Coca-Cola has been inferior to Pepsi in and even return rate is negative in past 10 years!<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Founded in 1886, American Water Works Company, is one of US largest water provider. <\/p>\n","protected":false},"author":1,"featured_media":12440,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[479,163,548],"tags":[846,1504,824],"class_list":["post-10432","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-utility","category-dividend","category-monopoly","tag-awk","tag-cwt","tag-nee"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10432","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=10432"}],"version-history":[{"count":32,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10432\/revisions"}],"predecessor-version":[{"id":36630,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10432\/revisions\/36630"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/12440"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=10432"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=10432"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=10432"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}