American Water dividend
MyStockButler's October 2026 analysis: American Water pays a current annualized dividend of $3.58 per share, with a base-case path to $4.51 in 2029. Its reported earnings cover dividends, but negative free cash flow means construction still depends on borrowing, equity and successful rate recovery.
How much does American Water pay per share over time?
Free cash flow means cash from operations after capital spending. It was negative $1.189 billion in 2022. It was negative $1.067 billion in 2025. Dividends were $428 million in 2021 and $633 million in 2025. The company therefore had to finance both investment and shareholder payouts beyond the cash left after construction.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Real free cash flow per share | -5.64 | -4.34 | -3.76 | -6.69 | |
| Free cash flow per share | -5.47 | -4.16 | -3.63 | -6.53 | |
| − Dividends paid, per share | 3.25 | 3.00 | 2.76 | 2.57 | 2.35 |
| = Paid out more than FCF, per share | 8.72 | 7.16 | 6.39 | 9.10 |
What this means. The company paid out 8.72 dollars per share more than its free cash flow because its free cash flow was negative and it still paid dividends.
How much would American Water's dividend pay you?
$10,000 invested in American Water at its 2.6% dividend yield (our report of October 29, 2026) pays $260.00 in the first year, before tax. If its dividend per share keeps changing 8.4% a year, as it did from 2021 to 2025, and the dividends are reinvested, year 10 pays $746.05, with $4,580.45 received in all.
Before tax. Past dividend growth is not a promise. Information only, not investment advice.
Is American Water's dividend covered by its cash?
The company also paid $175 million in net cash to remove retired property. That burden sits outside capital spending, and stock compensation adds an economic cost even though it is not a current cash payment. Dividends are covered by reported earnings, but construction leaves the company dependent on borrowing, equity and successful rate recovery.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Free cash flow | -1,067 | -811 | -701 | -1,189 | |
| − Dividends paid | 633 | 585 | 532 | 467 | 428 |
| − Share buybacks | 0 | 0 | 0 | 0 | 0 |
| = Paid out more than the free cash flow | 1,700 | 1,396 | 1,233 | 1,656 |
What this means. The cash rose or fell figures may not match the change in reported cash because they include restricted funds that are left out of cash and short-term investments.
What could change American Water's dividend?
Dividends begin from the current annualized rate of $3.58. The base case grows them at the 8% midpoint of management’s 7–9% target: $3.87 in 2027, $4.18 in 2028 and $4.51 in 2029. The bear case freezes the dividend at $3.58 before a 3% increase to $3.69. The bull case applies 9% growth, reaching $3.90, $4.25 and $4.63. The record of annual increases supports continuity, but negative free cash flow and external funding leave room for a pause.
Higher capital spending than operating cash flow, rising refinancing costs and additional share settlements would also weaken the forecast. During the first nine months of 2026, operations generated $1.635 billion while capital expenditures used $2.407 billion.
| October 2027 | October 2028 | October 2029 | |
|---|---|---|---|
| Earnings | 1,303 (1,225 / 1,313) | 1,407 (1,274 / 1,476) | 1,521 (1,325 / 1,659) |
| Shares (millions) | 295 (297 / 293) | 298 (302 / 294) | 300 (306 / 294) |
| Dividends per share | 3.87 (3.58 / 3.90) | 4.18 (3.58 / 4.25) | 4.51 (3.69 / 4.63) |
| Price to earnings | 23.00 (19.00 / 25.00) | 22.00 (17.00 / 26.00) | 21.00 (15.00 / 27.00) |
What is American Water's dividend yield today?
At $139.79, the shares trade at 24.2x trailing P/E. The forward P/E is 21.2x. Free-cash-flow yield is -3.8%, against a 2.6% dividend yield. Revenue grew 9.7% in 2025, with a 36.6% operating margin. American Water’s own real free cash flow was -21.4% of revenue, while net debt reached $15.749 billion. Diluted EPS rose from $4.51 in 2022 to $5.69 in 2025. Real free cash flow was -$5.64 per share after investment and stock pay.