American Water Works was founded in 1886 and operates as a water and wastewater utility in almost all US states and in some parts of Canada. AWW is the largest publicly traded water utility in the U.S. in terms of number of customers and revenue. AWW also continues to expand its market position by consistently acquiring small regional water utilities, thereby increasing sales and creating long-term synergies – an efficient long-term acquisition policy. AWW’s operations are ultimately divided into market-based and regulated businesses: The market-based operations consist of the Homeowner Protection Program and the Military Services Group (providing water and wastewater services to military installations). The regulated operations consist solely of water and wastewater services to residential and commercial customers. However, as the largest water utility in the U.S., American Water Works is always exposed to regulatory and political risks. In addition, water rate increases are set by law and determined by the respective public agencies. Furthermore, the stock is highly valued in terms of P/B and P/E ratios for many years. Thus, the dividend yield is also significantly below the current inflation rate and also below the yield for 10-year US government bonds. In summary, it can be stated that American Water Works is a defensive and long-term attractive investment with a slow-growing but reliable business model.
USA – Water Utility