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American Water Works
🇺🇸 AWK · NYSE/NASDAQ · US0304201033
Utilities
USD 134.32 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
23.8
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 134.32 ÷ 5.65 = 23.8
TTM period through: 2026-03-31
Forward P/E (estimated): 21.7
Based on analyst estimates
Reference: Provider P/E (Trailing): 24.3
Net Debt/EBITDA (TTM)
5.5x
Latest quarter: 23.6x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2026-03-31
Latest quarter (2026-03-31): 23.6x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
ROE
10.2%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
14.0x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Dividend Summary
Powered by EODHDDividend Yield (Fwd)
2.67%
TTM: 2.51%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Forward Yield (estimated): 2.67%
Trailing Yield (TTM, last 12 months): 2.51%
Payout Ratio (Fwd)
63.4%
TTM: 58.6%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (Fwd): 63.4%
Payout (TTM): 58.6%
Cash Flow Payout (TTM): 31.8%
FCF Coverage (TTM): -1.86x
Growth Streak
8 yrs
Consec. increases
Div. Growth (5Y)
8.6%
Dividend History
EODHD Dividends API| Status | Type | Decl. Date | Ex-Div Date | Pay Date | Currency | Amount |
|---|---|---|---|---|---|---|
| Forecast* | Quarterly | — | 12 May 2027 | — | USD | 0.895 |
| Forecast* | Quarterly | — | 10 Feb 2027 | — | USD | 0.828 |
| Forecast* | Quarterly | — | 13 Nov 2026 | — | USD | 0.828 |
| Forecast* | Quarterly | — | 12 Aug 2026 | — | USD | 0.828 |
| Paid | Quarterly | 29 Apr 2026 | 12 May 2026 | 02 Jun 2026 | USD | 0.895 |
| Paid | Quarterly | 05 Dec 2025 | 10 Feb 2026 | 03 Mar 2026 | USD | 0.828 |
| Paid | Quarterly | 28 Oct 2025 | 13 Nov 2025 | 02 Dec 2025 | USD | 0.828 |
| Paid | Quarterly | 30 Jul 2025 | 12 Aug 2025 | 03 Sep 2025 | USD | 0.828 |
* Extrapolated from past dividend history. Not an official announcement — treat as an estimate, not a confirmed date or amount.
Summary
American Water Works is a premier regulated water utility offering exceptional business quality, a strong economic moat, and a reliable dividend growth history. While the company's underlying infrastructure assets remain highly defensive and a P/FFO of 14.5x suggests fair valuation, the current 2.7% forward yield offers limited income generation compared to alternatives. Existing shareholders should maintain positions given the essential nature of the business, but new investors may want to monitor the stock for a better entry point yielding closer to 3%.
Sector Context
American Water Works provides essential water and wastewater services to millions of customers across the US, operating primarily as a regulated monopoly. For dividend investors, regulated water utilities offer some of the most defensive and predictable cash flows in the market, though heavy capital expenditure requirements for infrastructure upgrades and environmental compliance (like PFAS) typically result in negative free cash flow and a structural reliance on debt markets.
Temporary Opportunity Identified
The Federal Reserve's 'higher-for-longer' interest rate environment increases borrowing costs for capital-intensive infrastructure upgrades and makes utility dividend yields relatively less attractive to risk-free alternatives.
📊 Strategy Analysis
- • Unmatched economic moat operating as a regulated water and wastewater monopoly across multiple US states, providing highly predictable and defensive cash flows.
- • Exceptional dividend track record with 8 consecutive years of growth, an 8.6% 5-year CAGR, and a highly sustainable forward payout ratio of 63%.
- • Trading at a P/FFO of 14.5x, which falls squarely within the fair value range of 12-15x for capital-intensive utilities and better reflects true earnings power than the elevated 23.8x GAAP P/E.
- • Recent regulatory approvals for rate cases and the proposed merger with Essential Utilities provide clear visibility into future revenue and rate base growth.
⚠ What to Watch
- • The forward dividend yield of 2.67% currently falls below the 3% minimum threshold preferred for initiating new income-focused positions.
- • Massive structural capital expenditure mandates for EPA PFAS compliance and lead pipe replacements drive persistent negative free cash flow (-$354M).
- • Elevated leverage with a Net Debt/EBITDA of 5.55x requires continuous access to debt markets to fund necessary environmental infrastructure upgrades.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-07-04
Disclaimer: This information is for educational purposes only. Not financial advice.