Updated 3/5/25
American States Water Company (NYSE: AWR) isn’t the kind of stock that makes headlines, but for investors focused on dividends, it’s a name worth knowing. This California-based utility has built a reputation for consistency, providing water services to communities while also managing long-term government contracts for military bases.
With an essential service at its core, AWR enjoys steady revenue streams and predictable cash flows—two critical ingredients for a strong dividend stock. What sets AWR apart is its remarkable track record of rewarding shareholders. The company has raised its dividend for an incredible 69 consecutive years, making it one of the longest-running dividend growth stocks in the market.
For investors seeking stability, income, and slow but steady appreciation, AWR checks a lot of boxes. Let’s dive into what makes this stock an attractive choice for dividend-focused portfolios.
Key Dividend Metrics
🔹 Dividend Yield – 2.40% (higher than its five-year average, a good sign for income investors)
📈 5-Year Average Dividend Yield – 1.83% (historically, this stock has traded at a lower yield, so the current payout is more attractive)
💰 Forward Annual Dividend – $1.86 per share (offering a steady income stream)
📆 Ex-Dividend Date – February 18, 2025 (investors need to own shares before this date to receive the next dividend)
🔄 Payout Ratio – 56.5% (a healthy balance that allows for future dividend growth while reinvesting in the business)
🏆 Dividend Growth Streak – 69 years (one of the longest dividend increase streaks in the stock market)
Dividend Overview
AWR is the kind of stock that appeals to long-term investors who want steady, predictable income. The company’s near seven-decade streak of annual dividend hikes puts it in an elite category. Not only has it paid dividends consistently, but it has also increased them every year, proving its resilience through recessions, market downturns, and economic uncertainty.
The current yield of 2.40% is slightly above its historical average. This suggests the stock could be offering a better entry point than in previous years when the yield was lower. While some investors may prefer higher yields, AWR’s strength lies in its reliability and commitment to gradual, sustainable dividend growth.
AWR’s payout ratio of 56.5% shows that the company isn’t overextending itself. It has enough room to continue increasing dividends while keeping enough capital to fund operations and future growth.
Dividend Growth and Safety
For those who prioritize dividend growth over sheer yield, AWR is a standout. Over the past decade, the company has consistently grown its payout at a rate of around 7-8% per year. That kind of growth, paired with its defensive business model, makes it an attractive option for income investors who want their dividends to keep up with inflation.
The company’s regulated utility status provides an added layer of security. Water is an essential service, meaning demand remains stable regardless of economic conditions. Unlike companies in cyclical industries that experience revenue swings, AWR enjoys a steady flow of cash that supports its ability to pay and grow dividends.
With a history of responsible financial management and a reasonable payout ratio, AWR’s dividend looks well-protected. The company is in a strong position to continue rewarding shareholders for years to come.
Chart Analysis
Looking at the recent price action of American States Water Company (AWR), there are some interesting technical signals emerging. The stock has been in a clear downtrend since peaking above $85, but recent movements suggest a possible shift in momentum.
One of the more notable developments is the 50-day moving average crossing below the 200-day moving average, a classic “death cross” signal. This generally indicates that the stock has entered a bearish phase, but it’s important to note that price has begun to stabilize after a sharp decline. The 200-day moving average is flattening, which could mean that long-term support is forming.
The RSI (Relative Strength Index) sits at 38.78, hovering just above the oversold threshold of 30. This suggests that the stock was recently in an oversold condition and is now trying to recover. A rising RSI could be an early sign of a potential reversal, but it would need to cross 50 for a more bullish confirmation.
Volume levels show some spikes in buying activity, particularly around key support areas. However, overall volume has remained moderate, indicating that buyers are not yet stepping in aggressively. The lack of a strong volume surge alongside price movement suggests that any bounce could be tentative unless stronger demand emerges.
From a price perspective, AWR appears to have found support near the $70 level, where it has bounced several times. However, it remains below the 200-day moving average, meaning there is still overhead resistance to clear before a full recovery can take place. The next key resistance zone to watch is near $78-$80, where the 200-day moving average is positioned. A break above this area could shift sentiment more positively.
Analyst Ratings
📉 On February 3, 2025, BofA Securities downgraded AWR from neutral to underperform and reduced the price target from $85 to $71. Analysts pointed to concerns over the stock’s valuation, which was trading at a premium compared to other water utilities. With a P/E ratio of 25x and a price-to-book of 3.2x, they expressed skepticism about its ability to maintain such high levels in the current market environment.
📉 Similarly, on January 7, 2025, Wells Fargo lowered its rating from equal weight to underweight, adjusting the price target from $84 to $77. The firm raised concerns about AWR’s growth outlook, believing that its valuation did not align with its future earnings potential. The analysts felt the stock might be overpriced, making it less attractive relative to other investment opportunities in the sector.
📈 On the other hand, positive sentiment emerged on July 31, 2024, when Wells Fargo upgraded AWR from underweight to equal weight, raising the price target from $80 to $87. The decision was based on strong financial results and expectations for stable earnings growth. Analysts noted that despite short-term valuation concerns, the company’s operational efficiency and regulatory support could drive long-term stability.
📈 Another upgrade came on June 28, 2023, when UBS raised AWR’s rating from sell to neutral, increasing the price target from $86 to $88. The firm acknowledged operational improvements and a more favorable regulatory landscape that could bolster financial performance.
📊 As of February 19, 2025, the consensus one-year price target for AWR stands at $81.26, with analyst forecasts ranging between $71.71 and $95.55.
These mixed ratings reflect a balance of concerns and optimism. While some analysts believe the stock is overvalued, others highlight AWR’s steady earnings and operational resilience as reasons for potential upside.
Earnings Report Summary
American States Water Company (AWR) wrapped up its latest quarter with a solid performance, showing steady growth in key areas. The company reported earnings per share of $0.52 for its water utility segment, marking a nice jump from $0.41 in the same period last year. This growth reflects the company’s ability to manage costs efficiently while benefiting from steady demand in its core business.
For the full year, AWR pulled in $595.46 million in total revenue, maintaining its track record of financial stability. Earnings before interest and taxes (EBIT) came in at $184.48 million, while EBITDA reached $228.71 million—both strong indicators that the company is operating at a healthy margin.
The electric utility side of the business contributed as well, with quarterly earnings per share of $0.05, which was just a slight dip from $0.06 the year before. Meanwhile, the contracted services segment, which includes long-term agreements with military bases, posted earnings per share of $0.13, down just a touch from $0.15 in the prior year. While not a major drop, it does show a little softening in that part of the business.
Overall, AWR continues to do what it does best—delivering steady, reliable results. The company remains focused on keeping costs under control while ensuring strong operational performance. Given the nature of the utility sector, where stability and long-term planning are key, AWR looks like it’s sticking to a playbook that works. The earnings report shows a company that’s staying on course, balancing steady revenue with controlled expenses, and keeping shareholders in mind.
Financial Health and Stability
AWR operates with solid profitability metrics, a good sign for long-term sustainability.
- Profit margin stands at 20.03%, meaning the company is keeping a healthy portion of its revenue as profit.
- Operating margin is even higher at 28.4%, reflecting efficiency in its operations.
- Return on equity (ROE) sits at 14.06%, a respectable level for a regulated utility.
The company does carry a significant amount of debt, with a debt-to-equity ratio of 101.98%. This is relatively high, though not unusual for utility companies, which often finance infrastructure projects with borrowed capital. However, it does mean that rising interest rates could increase borrowing costs.
One area to monitor is cash flow. Operating cash flow of $198.73 million is strong, but levered free cash flow is negative at -$76.47 million. This suggests that capital expenditures are consuming a large portion of available cash, which could slow future dividend growth if not managed carefully.
Overall, AWR is financially stable, though its debt load and cash flow situation are factors to keep an eye on.
Valuation and Stock Performance
At $77.85 per share, AWR is trading at a valuation that isn’t particularly cheap, but also not overly expensive. Its trailing price-to-earnings (P/E) ratio is 24.48, which is reasonable for a utility stock. The forward P/E of 23.26 suggests modest earnings growth ahead.
Other key valuation metrics include:
- Price-to-sales (P/S) ratio of 4.90, which is slightly elevated but in line with industry norms.
- Price-to-book (P/B) ratio of 3.22, indicating that the stock trades at a premium relative to its book value.
- Enterprise value to EBITDA ratio of 15.87, a level that suggests the stock is priced for stability rather than aggressive growth.
The stock has underperformed the S&P 500 in the past year, but that’s not necessarily a bad thing. Utilities often lag during strong bull markets but hold up better during downturns. The stock is currently below its 200-day moving average ($79.02) but above its 50-day moving average ($75.13), hinting at a possible rebound.
With a beta of just 0.46, AWR is a low-volatility stock, making it a good fit for conservative investors who prefer stability over sharp price swings.
Risks and Considerations
Every stock has risks, and AWR is no exception. While it’s a defensive play, there are a few factors investors should be aware of.
⚠️ Interest Rate Sensitivity – As a capital-intensive company, AWR relies on borrowing to fund infrastructure investments. Higher interest rates can lead to higher financing costs, potentially squeezing margins.
💸 Regulatory Risks – Water utilities are subject to government regulations that determine how much they can charge customers. If AWR is unable to secure rate increases to offset rising costs, it could impact profitability.
🚰 California Exposure – The company operates mainly in California, a state with a history of droughts and complex environmental policies. Water shortages or regulatory restrictions could limit growth.
🔄 Slower Growth – While AWR is a stable business, its growth rate is slower than some of its peers. Investors looking for faster-growing dividend stocks might prefer other options in the utility sector.
Final Thoughts
AWR is a stock built for long-term income investors who value consistency over excitement. It’s not the highest-yielding option out there, but its dividend reliability, steady growth, and low volatility make it a strong candidate for a conservative portfolio.
With a yield above its historical average and a rock-solid 69-year streak of dividend increases, AWR continues to prove why it’s a dependable choice for dividend investors. While there are risks tied to interest rates and regulatory challenges, the company’s essential service model gives it a strong foundation.
For those seeking a steady, growing dividend backed by a financially sound company, AWR remains an attractive option. It may not deliver explosive stock price gains, but for patient investors, it offers something even more valuable—reliable income and long-term stability.
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