American Water Works Company, Inc. (AWK) Covered Calls

American Water Works Company, Inc. is the largest investor-owned water and wastewater utility in the United States. Founded in 1886, the company provides regulated water and wastewater services to approximately 14 million people across 14 states and on 18 military installations. It operates primarily through regulated subsidiaries, focusing on infrastructure investment, water quality, and system reliability to provide essential services to residential, commercial, and industrial customers.

You can sell covered calls on American Water Works Company, Inc. to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for AWK (prices last updated Thu 4:16 PM ET):

Want to make money with covered calls?  Sign Up For A Free Trial

American Water Works Company, Inc. (AWK) is the premier water and wastewater utility provider in the United States, serving a vast footprint that includes approximately 14 million people. Celebrating its 140th anniversary in 2026, the company operates primarily as a regulated utility, which means its rates are overseen by state public service commissions. This regulated structure provides a high degree of revenue predictability and stability, as the company earns a return on its capital investments into critical infrastructure like treatment plants, storage tanks, and thousands of miles of pipes.

The company’s growth strategy is built on a massive capital investment program, with plans to spend between $19 billion and $20 billion through 2030 on system upgrades and PFAS (per- and polyfluoroalkyl substances) remediation. In a landmark move for the industry, AWK announced a major merger with Essential Utilities (WTRG) in late 2025, which received overwhelming shareholder approval in early 2026. This combination is expected to create a utility powerhouse with a rate base of nearly $30 billion, significantly expanding the company’s scale and operational efficiency across 17 states once finalized in early 2027.

Competitive Landscape

AWK operates in a fragmented industry where the primary competition comes from government-owned municipal water systems, which serve about 86% of the U.S. population. Among investor-owned peers, its most direct rival is Essential Utilities, Inc., its current merger partner. Other significant publicly traded competitors include California Water Service Group and American States Water Company, both of which face similar regulatory environments and infrastructure challenges.

Beyond traditional utilities, AWK is often compared to water technology firms like Xylem Inc., which provides the equipment and data analytics that utilities use to manage their networks. Investors also look at broad utility plays like the Utilities Select Sector SPDR Fund as a proxy for the sector. AWK is highly attractive to income-oriented traders due to its consistent dividend growth and its very active options market, which allows for conservative covered call strategies against its stable share price.

Strategic Outlook and Innovation

The strategic future of American Water is defined by its role in solving the "national water crisis" caused by aging infrastructure and emerging contaminants. By leveraging its national scale, the company can deploy advanced technologies more efficiently than smaller municipal systems. These innovations include acoustic leak detection to identify underground pipe breaks before they surface, drone-based infrared sensors for reservoir inspections, and smart metering systems that provide real-time usage data to customers and operators alike.

Looking forward, the company is focused on the successful integration of Essential Utilities and the execution of its 10-year, $46 billion+ capital plan. This plan is designed not only to ensure regulatory compliance but also to drive a targeted 7% to 9% annual earnings growth. As a leader in environmental, social, and governance (ESG) practices, AWK remains a core holding for institutional investors seeking "defensive" growth, as the demand for safe, clean drinking water remains entirely decoupled from the broader economic cycle.

Want more examples? AWI Covered Calls | AWR Covered Calls