Essential Utilities: Snatch Up This Dividend Champion Now

The article argues that Essential Utilities’ merger with American Water Works could materially improve the company’s growth profile and credit quality. After an upcoming dividend reset tied to the deal, dividend growth is expected to accelerate versus Essential Utilities operating on its own. The combined company would become the largest regulated water utility in the U.S., which should support a stronger, more stable earnings and dividend trajectory. The author says the S&P credit rating could improve from A- with a positive outlook to A with a stable outlook, lowering financial risk. At current levels, the stock is estimated to trade at a 12% discount to fair value, with the potential for double-digit annual total returns through 2031. Main risks are regulatory approvals, political pushback on rates, and refinancing costs if interest rates remain high.