How to buy American Water Works shares

Utility companies are some of the most stable investments around. This guide takes a look at American Water Works, one of the largest utilities in the US, and explains how to buy its shares.
By: James Knight
James Knight
When he isn’t at work, James is an avid trader and golfer who likes to travel. He once fed,… read more.
Updated: Aug 23, 2021
Tip: our preferred broker is, eToro: visit & create account

This page gives you a brief history of American Water Works and why you might want to invest in it. Find out how it has performed in recent years and use the step-by-step guide to get your own shares.

Compare the best American Water Works trading platforms

To get shares in American Water Works you need to use an online stock broker. The platforms below are some of the best ones around and you can dive in straight away by following the links in the table. Otherwise, keep reading to learn more about American Water.

1
Min. Deposit
$50
Exclusive promotion
user-score
10
Trade/invest in stocks with just $50
Invest for dividends and get payout on stocks on Ex-Dividend day
Over 11 payment methods, including PayPal
Start Trading
Description:
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, ETF’s, indices and commodities. eToro users can connect with, learn from, and copy or get copied by other users. Buying stocks on eToro is free and you can invest with as little as $50.
Payment Methods
Bank Transfer, Wire Transfer
Full regulations list:
CySEC, FCA
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.
2
Min. Deposit
$1
Exclusive promotion
user-score
9.3
0 Commissions and no deposit minimums
Registered with and regulated by SEC and FINRA
Loss of cash protection
Start Trading
Description:
Financial company driven by technology and offering all-in-one self-directed investment platform that provides excellent user experience.
Payment Methods
Full regulations list:

How to buy American Water Works stock, a step-by-step guide

The process of getting shares in American Water Works isn’t massively complicated, so don’t worry even if you’re new to stock investing. These are the steps to follow in order to complete your investment:

  1. Choose a broker. You will need to use an online brokerage platform. There are many different options to choose from, each with their own unique benefits and drawbacks. The comparison table above can help you select the right broker for you, and you can head to our comprehensive broker reviews if you’re still unsure.
  2. Create an account. Once you’ve selected your broker, simply go to their website and create an account. The steps required for this will vary from platform to platform, but generally you can expect to have to provide your name, email address, phone number, and some form of photo identification.
  3. Deposit funds. Log into your broker account and select the option to deposit funds. Depending on your broker you’ll have a variety of payment options available; most brokers accept bank transfers and debit card payments, but not all accept e-wallets such as PayPal. Select your preferred payment method and deposit the amount of money you wish to invest in American Water Works shares.
  4. Place an order for AWK stock. Search for American Water Works’s ticker symbol (AWK) and see the current price at which the stock is trading. If you’re happy with the price, enter the amount of shares you wish to own and place your order.
  5. Execute your order. Once you have placed your order, your broker will automatically execute it for you and your American Water Works shares will be listed in your account. Congratulations, you’ve just bought shares in American Water Works.

Should I invest in American Water Works?

You might want to if you’re interested in a defensive investment or a company that can help stabilise your portfolio. American Water Works is a utility stock, which is a type of stock that is consistent even during difficult economic times. Everyone always needs water, whether it’s during a recession or when the stock market is booming.

Defensive investments are an ideal way to protect your portfolio against natural economic cycles. You can use them as a compliment to riskier, or more cyclical stocks, or simply as a low-risk way to build wealth.

American Water Works might be appealing because it isn’t just any utility company, it’s the largest public water company in the United States and one of the largest utilities in the world full stop. It’s been operating since 1886 and provides plumbing, heating, and sewage services across the United States.

How has the company performed in recent years?

It’s done extremely well for a utility stock, particularly over the last couple of years. Since making a loss in 2008 – its first year as a public company – American Water Works has dramatically improved performance. It now routinely makes more than $1bn in profits every year.

Since the start of 2018, the stock price has more than doubled in response to its strong business performance. There are a few factors that have helped to drive this growth; with ever-increasing demand, some clever acquisitions, and an attractive dividend yield all playing a part.

The only blot on the copybook, at least in terms of the stock market, came at the beginning of the pandemic. In March 2020, the share price dropped by a third almost overnight as the whole economy shuddered. That could have been worrying for a stock that’s meant to be resistant to economic shocks, but it rebounded instantly and, unlike many other companies, kept increasing revenue throughout the crisis.

Is it a good time to buy American Water Works shares now?

There has rarely been a bad time over the course of its history as a public company. While that’s no guarantee of success in the future, there’s every reason to think it can continue to report strong financials. Those financials have also allowed it to return lots of money back to shareholders through dividends in recent years.

One of the reasons to be positive is how much the company has invested in the future already. Recent acquisitions have added 50,000 fee-paying customers, while it’s spent over a billion dollars on infrastructure improvements. Those should translate into more revenue in the long term.

Something to look out for is the effect of severe weather patterns – heatwaves in 2020 and 2021 caused a spike in water usage – and whether these continue to crop up. More demand obviously leads to more revenue, but it’s difficult to predict how these events pan out. Keep an eye on the news below in order to be the first to know if anything crops up.

Buying, selling and trading American Water Works shares for beginners

What to do before buying shares

You should always take the time to research a stock fully before investing your money, especially if you haven’t bought shares before. The more knowledge you have, the better your chances of making a wise investment. 

With that in mind, here’s a checklist to run through before you start.

  1. Research the company. You should always examine the fundamentals of a company first. What is American Water Works? How did the company get its start? How did it grow? Is American Water Works’s balance sheet picking up? Is the company innovating? The more you know about American Water Works, the better positioned you’ll be to make smart investment decisions.
  2. Make sure you understand the basics of stock investing. Before getting involved in the stock market, make sure you have an understanding of how it works. This will ensure that you have more clearly defined goals and have thought through how you will achieve them.
  3. Decide between share dealing and CFD trading. Choose the type of investment strategy you want to pursue, and make sure you have carried out the necessary fundamental or technical analysis for share dealing and CFD trading respectively.
  4. Set the size of your budget. The golden rule of investing is never to risk more than you can afford to lose. Not every investment you make will result in a profit, so it is important to set a budget that not only allows good potential for capital growth, but also protects against overly damaging losses.
  5. Find the right broker. Individual brokers each have their own pros and cons. Some will have low fees but have a user interface you struggle to understand, whereas others may be a bit more expensive but come with a range of features that you want to take advantage of. Our broker reviews can help you find the right platform for you.
  6. Examine broader market conditions. No stock exists in a vacuum, and it’s always important to analyse the general trends of the stock market as a whole before investing. If a bear market is setting in and stock prices are falling, it’s best to wait it out and invest your money later when the stock is cheaper. If, however, the market is looking bullish, you’ll want to make your investment quickly to get the maximum benefit from rising stock prices. Our news section can help you keep on top of movements in the financial markets.

What is the difference between buying, selling, and trading shares?

If you’re new to stock investing, then it’s important to understand the basics of how to buy, sell, and trade American Water Works shares. Here’s a quick run-through of what’s involved in each.

Buying American Water Works

This process involves finding a broker and placing an order for American Water Works stock, as outlined in the steps further up this page. Ideally you want to time your investment when the stock’s price is low so that you can profit by selling the shares after they increase in value.

Selling American Water Works

When you sell any American Water Works shares you have bought, you’ll want to do so at a higher price than the one at which you bought to earn a profit. 

When you sell is up to you. You might decide to hold for a long period of time, hoping to benefit from the company growing steadily throughout. Or, if you see that American Water Works’s stock is already up a lot compared to the price you bought it and you’ve noticed that the stock market is starting to fall, it might make sense to sell and take your profits to invest elsewhere. Equally, if the stock has fallen since you bought it and looks set to fall further, it might be a good idea to cut your losses by selling your shares.

Trading American Water Works

Trading is the same process, it’s just done over shorter periods of time with the aim to make small profits on a regular basis. This means that you can make money faster and spend your profits in your day-to-day life – however, on the other side it means you can lose money faster as well. For inexperienced investors, we generally recommend making investments for at least 6 months to a year instead of making trades in quick succession.

You can trade American Water Works shares through buying and selling shares, or by trading with CFDs. These allow investors to speculate on stock prices and trade with leverage in pursuit of bigger gains. CFDs trading is explained further in the next section, but it is worth noting that beginners should avoid trading with leverage. It comes with large risks and is best left to experienced investors.

Share dealing vs CFD trading

When it comes to investing in any stock, the two options you have are share dealing and trading. Which one of these methods to opt for largely depends on your investment timeline, with investors thinking long term tending to go for share dealing, and those looking for short term gains pursuing a more aggressive trading strategy.

Here’s a quick summary of the two approaches, and the pros and cons of each.

Share dealing 

Share dealing refers to the practice of buying and holding shares in a particular company over the long term. When investing like this, you’re seeking to profit either from dividend payments or an increase in the stock’s price over time.

When investing your money this way, it is important to do thorough fundamental analysis of the company in which you are investing. You want to put your money in a stock you believe will trend upwards over time, even if there is some market volatility along the way, rather than get distracted by shorter term peaks and troughs.

Pros

  • Can build wealth over time to achieve financial goals
  • Don’t need to be very reactive to short-term market movements
  • Some stocks will give you an income through regular dividend payments

Cons

  • Takes a long time to realise any profits
  • Your capital is tied up in stocks and cannot be used for other investments

CFD Trading 

If your aim is to generate profits in the short term, then you might be better off trading shares than holding them in your portfolio. Stock trades like this are executed using CFDs (contracts for difference), which allow investors to trade against the value of a stock without having to take ownership of it. When CFD trading, investors are looking to buy and sell stocks fast to profit from short-term fluctuations in value.

One aspect of CFD trading that many investors find attractive is that they allow you to trade with leverage. This means you can place large trades while only putting up a fraction of the value yourself – for instance, if a platform offered leverage of 1:10, you could put £10 into AWK shares and be able to trade £100 worth. This can maximise profits if the market moves in your favour, but be careful as it can also lead to heavy losses.

When trading using CFDs, it is key to be skilled at technical analysis and reading stock price charts. As you’re trading stocks quickly and frequently, the fundamental strength of the company in which you’re investing isn’t as important as being able to predict how its stock price will rise and fall minute-by-minute.

Pros

  • Can generate fast profits if you read the market right 
  • Some platforms allow you to trade with leverage
  • Prevents your capital being tied up so you can take advantage of investment opportunities

Cons

  • Trading with leverage is risky and can lead to big losses
  • Doesn’t necessarily generate growth over the long term

Consider which approach suits you best and craft an investment strategy that works for you. If you need more information, then simply take our course on short term trading.

How to choose a broker

With the wide variety of online brokers available these days, it can be hard to figure out which is the best service to go with. Our comparison table and in-depth reviews can help you cut through the noise, but by and large these are the aspects you should be considering when selecting a broker:

  • Range of stocks available. The most important thing is that you can actually use the broker to find the shares you’re looking for. Some brokers offer more stocks than others, and many will allow you to trade other assets, such as forex and commodities.
  • Fees and commissions. You want to keep as large a chunk of your profits as you can, so it’s important to make sure your broker doesn’t charge high fees that can eat into your profits.
  • Regulation. You should only use regulated brokers. Unregulated brokers can be risky and offer little to no protection if the business were to fail while you had funds in your account.
  • Payment methods available. You might want to fund your trading account using a specific payment method, such as PayPal. Not all brokers accept every payment method, but using our comparisons you can search only the brokers that support the option you’re looking for.
  • Reputation. One of the strongest indicators of a broker’s reliability is the reputation it has with the customers who have used it. Brokers are online businesses, and as such many user experiences can be found online. You can check these out in addition to our reviews to make sure you choose the right platform.
  • Customer service. As you’re going to be investing your money using the platform, you want to check that the broker offers good customer service in case you have a query or something goes wrong.

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James Knight
Financial writer
When he isn’t at work, James is an avid trader and golfer who likes to travel. He once fed, rode, and ate an ostrich all on… read more.