12 Best Income Stocks to Buy Now

6. American Water Works Company, Inc. (NYSE:AWK)

Number of Hedge Fund Holders: 53

Dividend Yield as of December 28: 2.54%

American Water Works Company, Inc. (NYSE:AWK) is one of the best dividend stocks to invest in.

On December 17, Barclays analyst Nicholas Campanella lowered the firm’s price target on American Water Works Company, Inc. (NYSE:AWK) to $122 from $134 and kept an Underweight rating on the shares. The move came as part of Barclays’ 2026 outlook for the utilities sector. Barclays still holds a positive view on the industry overall. The firm frames 2026 as a year of “execution and defense,” following a period when utilities ramped up capital spending and later guided to earnings revisions that moved higher.

Separately, the company announced in October an all-stock transaction valued at about $12 billion, marking the largest US water utility deal on record. The combination brings together American Water and Essential Utilities. The merged company is expected to serve nearly five million customers across 17 states. Management highlighted growing opportunities tied to infrastructure investment and environmental remediation. Executives also pointed to rising water demand from data centers during an investor call held Monday morning.

By total value, the deal is the largest US water utility transaction dating back to the 1990s and the second-largest globally, based on data compiled by Bloomberg. American Water CEO John C. Griffith will lead the combined company, while Essential’s chief executive, Christopher H. Franklin, will take on the role of executive vice chair of the board.

Following the merger, the new company plans to review strategic alternatives for its non-water operations. Those assets include Peoples Natural Gas, which serves more than 700,000 customers in Pennsylvania. Under the terms of the agreement, American Water shareholders will own about 69% of the combined entity, with Essential investors holding the remaining stake.

American Water Works Company, Inc. (NYSE:AWK) provides drinking water, wastewater, and related services across multiple U.S. states and in Ontario, Canada.