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American Water's (AWK) Unit to Invest $28.3M in Water Storage

American Water Works AWK announced that its unit, Pennsylvania American Water, will invest $28.3 million to rehabilitate 10 of its water storage tanks and construct four new tanks. Pennsylvania American Water’s tank rehabilitation program of inspecting, sandblasting and repainting tanks extends the tanks’ service lives and helps to protect water quality.

Proper maintenance of the old water storage tanks and the addition of new tanks allow the company to meet rising demand from its residential and commercial customers and assist firefighters during emergencies. Since a major portion of AWK’s water infrastructure is nearing the end of its effective service life, timely repair, maintenance and upgrades become essential to provide reliable services to customers.

Pennsylvania American Water has been upgrading and maintaining its water and wastewater infrastructure. It invested nearly $688 million in 2023 for infrastructure upgrades. The company will continue investing to make essential upgrades and maintain aging assets in the long term.

Investment Required in Water Space

Per the U.S. Environmental Protection Agency, investments of $625 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand over the next 20 years. Water infrastructure, like water mains, storage tanks and purifying units, needs maintenance at proper intervals.

American Water aims to invest $3.1 billion in 2024, with a major portion utilized for infrastructure improvements in regulated businesses. Over the long term, AWK aims to invest in the range of $16-$17 billion in 2024-2028 and $34-$38 billion in 2024-2033.

Other water utilities, like Essential Utilities WTRG, California Water Service Group CWT and Middlesex Water MSEX, have well-chalked-out capital investment plans to strengthen infrastructure.

Essential Utilities plans to invest $1.3-$1.4 billion in 2024 for over 5,000 planned projects and $7.2 billion in 2024-2028 to improve water and natural gas systems to better serve customers with the help of improved information technology.

California Water Service plans to invest more than $380 million in capital expenditures in 2024.

Middlesex Water plans to invest $237 million during 2024-2026 to strengthen its water and wastewater infrastructure to service customers in a safe, reliable and efficient manner.

The current dividend yield for WTRG, CWT and MSEX’s are pinned at 3.1%, 2.1% and 2.3% respectively, which is better than the Zacks S&P 500 Composite’s yield of 1.58%.

Price Performance

Over the past three months, American Water gained 9.3% compared with the industry’s 6.9% growth.

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Zacks Investment Research
Zacks Investment Research


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Zacks Rank

American Water currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report

California Water Service Group (CWT) : Free Stock Analysis Report

Middlesex Water Company (MSEX) : Free Stock Analysis Report

Essential Utilities Inc. (WTRG) : Free Stock Analysis Report

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