Water Investment Ideas

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American Water Works (AWK) - >>> This underrated dividend stock could make you rich


https://www.fool.com/investing/2020/10/31/3-dividend-stocks-that-should-pay-you-the-rest-of/


You may be tempted to dismiss American Water Works (NYSE:AWK) as a boring company and write off its relatively low yield of 1.4%, but the stock's jaw-dropping returns in the past decade should make you sit up and take notice.

American Water, which provides water and wastewater services to 15 million customers across 45 states, has paid a dividend for decades and increased it annually for at least the past 10 years. Management has followed a clearly set-out dividend policy that calls for "dividend increases with long-term earnings-per-share growth" and a target payout ratio in the range of 50% to 60% of net income.

That policy suggests investors can expect 7% to 10% growth in American Water's dividends through 2024, in line with its similar target EPS growth, driven by rate increases. It's a regulated utility, so its rates are set and any hikes must be approved by public utility commissions. To ensure it wins timely approvals of those increases when it requests them, American Water is targeting $20 billion to $22 billion in capital investment over the next decade -- such moves go a long way toward convincing regulators. As its rates grow, so should profits and dividends, making American Water a reliable dividend stock to own for decades.

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