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AWR vs CWT: Which Water Utility Stock Offers Better Return in 2026?
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Key Takeaways
AWR and CWT benefit from steady water demand, rate mechanisms and major infrastructure spending.
CWT leads on 2026 EPS growth, long-term growth, dividend yield and recent stock price performance.
AWR has lower debt-to-capital and stronger ROE, while CWT plans larger capital investments.
The companies under the Zacks Utility - Water Supply industry deliver reliable water and wastewater services to millions of U.S. consumers. They operate and maintain extensive water distribution and wastewater treatment systems, ensuring the safe delivery of clean water while addressing the challenges posed by an aging infrastructure.
The highly fragmented industry comprises more than 50,000 community water systems and nearly 14,000 wastewater treatment facilities that provide essential services to customers across the United States. The industry manages nearly 2.2 million miles of aging pipelines and continues to invest heavily in infrastructure upgrades and maintenance to ensure reliable water and wastewater services. The regulated business model allows them to recover these investments through approved rate increases while generating stable cash flows that support consistent dividend payments. Given the essential nature of water and wastewater services, demand remains resilient regardless of economic conditions.
Amid the rising importance of water and wastewater service provider companies, let us discuss American States Water Company (AWR - Free Report) and California Water Service Group (CWT - Free Report) . Both companies are supported by steady demand, constructive rate mechanisms and significant capital investments to modernize and replace aging infrastructure.
American States Water Company benefits from its regulated utility business, an expanding customer base, constructive rate outcomes and a diversified business model. These factors support stable revenues and earnings growth while generating predictable cash flows to fund infrastructure investments and consistent dividend payments. Its systematic investment plans for infrastructure development and replacement improve operational efficiency, enhancing service reliability and supporting long-term growth.
California Water Service, supported by both regulated and non-regulated structures, is experiencing rising water demand and a steadily expanding customer base, supported by strategic acquisitions and organic growth. Its strategic investment strategy supports infrastructure development, improves operational efficiency, enhances service reliability and boosts long-term financial performance.
American States Water and California Water Service are established water utilities. Comparing their core fundamentals provides insight into which company is better positioned for long-term value creation.
AWR & CWT’s Earnings Growth Projections
The Zacks Consensus Estimate for CWT’s EPS is pegged at $2.56 in 2026 and $2.74 in 2027, suggesting year-over-year growth of 19.07% and 7.03%, respectively. CWT’s long-term (three to five years) earnings growth is currently pinned at 10.62%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AWR’s earnings per share (EPS) is pegged at $3.71 in 2026 and $3.82 in 2027, suggesting year-over-year growth of 10.09% and 2.83%, respectively. AWR’s long-term earnings growth is currently pinned at 6.93%.
Image Source: Zacks Investment Research
Debt to Capital
Utilities operations are capital-intensive, requiring continuous investments to modernize, maintain and replace aging infrastructure. Water utilities typically fund long-term capital projects through a combination of internally generated cash flows and debt raised in the capital markets, supporting sustainable growth.
American States Water's debt-to-capital currently stands at 46.45% compared with California Water Service’s 50.29%. Both companies are using debt to fund their business. Both AWR and CWT’s debt levels are lower than the industry’s 54.63%, with CWT slightly higher than AWR, indicating greater dependence on borrowed funds.
Return on Equity
Return on equity (ROE) plays a vital role in evaluating how efficiently a company utilizes shareholders’ capital to generate profit. A consistently high ROE indicates efficient capital allocation, strong operational performance, effective management and an enhanced ability to create long-term shareholder value.
American States Water's current ROE is 13.06%, outperforming California Water Service, which reports a lower ROE of 7.06%. AWR uses shareholder funds more effectively and generates higher profits, though the company’s returns remain slightly below the industry average of 15.44%.
AWR & CWT’s Dividend Yield
Utility companies are known for paying regular dividends, supported by their stable earnings, predictable cash flows and regulated business models. Consistent dividend payments reflect financial strength and underscore management's commitment to delivering attractive long-term returns to shareholders.
Currently, the dividend yield for California Water Service is 2.82%, while that for American States Water is 2.50%. The dividend yields of both companies are higher than the S&P 500’s yield of 1.42%.
Image Source: Zacks Investment Research
Capital Investment Plans
U.S. water utilities require substantial investments to modernize, maintain and replace aging water and wastewater infrastructure to ensure safe and reliable service. According to the Environmental Protection Agency, the sector will require nearly $1.25 trillion in investments over the next 20 years to maintain and expand water services.
California Water Service plans to invest $627 million and $667 million in 2026 and 2027, respectively, to strengthen infrastructure, enhance operational efficiency, drive rate base growth and ensure reliable water service. American States Water's planned 2026 capital investment of $185-$225 million will fund infrastructure upgrades, enhance service reliability and drive long-term financial performance.
Price Performance
California Water Service has gained 7.9% over the past month compared with American States Water 5% rally.
Image Source: Zacks Investment Research
Summing Up
American States Water and California Water Service both benefit from expanding customer bases and new rates, with significant infrastructure investments supporting reliable service and long-term growth across the United States.
Supported by stronger earnings per share growth, a higher dividend yield, a broader capital investment plan and better stock price performance, CWT is a more attractive choice in the utility sector.
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AWR vs CWT: Which Water Utility Stock Offers Better Return in 2026?
Key Takeaways
The companies under the Zacks Utility - Water Supply industry deliver reliable water and wastewater services to millions of U.S. consumers. They operate and maintain extensive water distribution and wastewater treatment systems, ensuring the safe delivery of clean water while addressing the challenges posed by an aging infrastructure.
The highly fragmented industry comprises more than 50,000 community water systems and nearly 14,000 wastewater treatment facilities that provide essential services to customers across the United States. The industry manages nearly 2.2 million miles of aging pipelines and continues to invest heavily in infrastructure upgrades and maintenance to ensure reliable water and wastewater services. The regulated business model allows them to recover these investments through approved rate increases while generating stable cash flows that support consistent dividend payments. Given the essential nature of water and wastewater services, demand remains resilient regardless of economic conditions.
Amid the rising importance of water and wastewater service provider companies, let us discuss American States Water Company (AWR - Free Report) and California Water Service Group (CWT - Free Report) . Both companies are supported by steady demand, constructive rate mechanisms and significant capital investments to modernize and replace aging infrastructure.
American States Water Company benefits from its regulated utility business, an expanding customer base, constructive rate outcomes and a diversified business model. These factors support stable revenues and earnings growth while generating predictable cash flows to fund infrastructure investments and consistent dividend payments. Its systematic investment plans for infrastructure development and replacement improve operational efficiency, enhancing service reliability and supporting long-term growth.
California Water Service, supported by both regulated and non-regulated structures, is experiencing rising water demand and a steadily expanding customer base, supported by strategic acquisitions and organic growth. Its strategic investment strategy supports infrastructure development, improves operational efficiency, enhances service reliability and boosts long-term financial performance.
American States Water and California Water Service are established water utilities. Comparing their core fundamentals provides insight into which company is better positioned for long-term value creation.
AWR & CWT’s Earnings Growth Projections
The Zacks Consensus Estimate for CWT’s EPS is pegged at $2.56 in 2026 and $2.74 in 2027, suggesting year-over-year growth of 19.07% and 7.03%, respectively. CWT’s long-term (three to five years) earnings growth is currently pinned at 10.62%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AWR’s earnings per share (EPS) is pegged at $3.71 in 2026 and $3.82 in 2027, suggesting year-over-year growth of 10.09% and 2.83%, respectively. AWR’s long-term earnings growth is currently pinned at 6.93%.
Image Source: Zacks Investment Research
Debt to Capital
Utilities operations are capital-intensive, requiring continuous investments to modernize, maintain and replace aging infrastructure. Water utilities typically fund long-term capital projects through a combination of internally generated cash flows and debt raised in the capital markets, supporting sustainable growth.
American States Water's debt-to-capital currently stands at 46.45% compared with California Water Service’s 50.29%. Both companies are using debt to fund their business. Both AWR and CWT’s debt levels are lower than the industry’s 54.63%, with CWT slightly higher than AWR, indicating greater dependence on borrowed funds.
Return on Equity
Return on equity (ROE) plays a vital role in evaluating how efficiently a company utilizes shareholders’ capital to generate profit. A consistently high ROE indicates efficient capital allocation, strong operational performance, effective management and an enhanced ability to create long-term shareholder value.
American States Water's current ROE is 13.06%, outperforming California Water Service, which reports a lower ROE of 7.06%. AWR uses shareholder funds more effectively and generates higher profits, though the company’s returns remain slightly below the industry average of 15.44%.
AWR & CWT’s Dividend Yield
Utility companies are known for paying regular dividends, supported by their stable earnings, predictable cash flows and regulated business models. Consistent dividend payments reflect financial strength and underscore management's commitment to delivering attractive long-term returns to shareholders.
Currently, the dividend yield for California Water Service is 2.82%, while that for American States Water is 2.50%. The dividend yields of both companies are higher than the S&P 500’s yield of 1.42%.
Image Source: Zacks Investment Research
Capital Investment Plans
U.S. water utilities require substantial investments to modernize, maintain and replace aging water and wastewater infrastructure to ensure safe and reliable service. According to the Environmental Protection Agency, the sector will require nearly $1.25 trillion in investments over the next 20 years to maintain and expand water services.
California Water Service plans to invest $627 million and $667 million in 2026 and 2027, respectively, to strengthen infrastructure, enhance operational efficiency, drive rate base growth and ensure reliable water service. American States Water's planned 2026 capital investment of $185-$225 million will fund infrastructure upgrades, enhance service reliability and drive long-term financial performance.
Price Performance
California Water Service has gained 7.9% over the past month compared with American States Water 5% rally.
Image Source: Zacks Investment Research
Summing Up
American States Water and California Water Service both benefit from expanding customer bases and new rates, with significant infrastructure investments supporting reliable service and long-term growth across the United States.
Supported by stronger earnings per share growth, a higher dividend yield, a broader capital investment plan and better stock price performance, CWT is a more attractive choice in the utility sector.
Based on the above discussion, California Water Service currently has an edge over American States Water, though both carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.