In an era of financial uncertainty and environmental challenges, Essential Utilities stands out as a beacon of strength, service, and sustainable growth.

A Legacy of Service and Growth

With roots stretching back over 135 years, Essential Utilities, Inc. has crafted a reputation as one of the nation’s most reliable water, wastewater, and natural gas providers. Formed in 2020 through the integration of Aqua and Peoples, the company now serves millions of residential and commercial customers across nine states, including Pennsylvania, Texas, and Ohio.

Its journey reflects a commitment to excellence and a strategic focus on infrastructure investment and modernization. Over the past five years, Essential Utilities has invested $5.4 billion to upgrade and expand its networks, bringing nearly 2,100 miles of aging water mains and gas pipelines into compliance with today’s rigorous safety and environmental standards.

Financial Strength and Growth Trajectory

Investors seeking a blend of stability and growth will find much to admire in Essential Utilities’ financial profile. The company delivers recurring revenue from regulated rates and long-term contracts, underpinning a defensive utility play that can weather market volatility.

Key segments and their 2024 revenues are outlined below, illustrating the diversified revenue mix that supports ongoing expansion:

From 2021 to 2022, revenue surged from $1.88 billion to $2.29 billion, while net income climbed from $432 million to $465 million. Looking ahead, the company projects a 5–7% EPS CAGR through 2027, driven by an 8% CAGR in its rate base.

Sustainability and Community Impact

Beyond financial metrics, Essential Utilities prioritizes environmental stewardship and community well-being. The company has reduced greenhouse gas emissions by 25% through initiatives like methane reduction programs, renewable electricity sourcing, and hydrogen fuel cell trials.

Since 2015, it has contributed more than $20 million via the Essential Foundation and logged over 15,000 volunteer hours supporting local schools, water quality testing, and conservation efforts. These initiatives demonstrate a genuine commitment to sustainable growth and corporate responsibility that resonates with stakeholders and regulators alike.

Strategic Vision: Building for Tomorrow

Essential Utilities’ future roadmap is anchored by five strategic pillars: safety, regulatory compliance, customer service, sustainability, and operational excellence. Its upcoming merger with American Water, expected to close in early 2027, will create the largest combined water and wastewater utility in the United States.

Key growth drivers include:

• Continued pipeline and main replacements targeting lead and PFAS remediation
• Expanding municipal and industrial contracts through targeted acquisitions
• Leveraging data center water services to tap into emerging markets

Why Essential Utilities Matters to Investors

For portfolio managers and individual investors alike, Essential Utilities offers a blend of stability, income, and growth potential rarely found outside the power sector. Its regulated rates provide an inflation-resistant revenue stream, while dividend payouts maintain a reliable yield with a sustainable 60–65% payout ratio.

Consider the following investment highlights:

• Defensive, regulated cash flows backed by essential services
• Robust rate base CAGR of 8% through 2027
• Environmental initiatives that reduce risk and align with ESG criteria

Investors should, however, stay mindful of interest rate trends and the company’s leverage profile, including a debt-to-equity ratio of 1.25 and modest liquidity metrics. Nevertheless, ongoing equity raises and disciplined capex spending—$1.4 billion planned for 2025—position the company to meet rising demand for clean water and safe natural gas.

Realizing the Potential

As aging infrastructure challenges mount across the U.S., Essential Utilities stands at the forefront of delivering critical upgrades. Its track record of nearly 100% drinking water compliance days in 2024 and a 45% reduction in gas outages underscores operational excellence that benefits communities and shareholders.

With a clear merger path, ambitious sustainability goals, and a resilient regulatory framework, Essential Utilities is poised to continue powering both local economies and investor portfolios.

Embrace the future of water and gas utilities with Essential Utilities, where steadfast performance meets visionary growth.