American Water Works creates dividend reinvestment and direct stock purchase plans

American Water creates dividend reinvestment plan

VOORHEES, N.J. — American Water Works Co. Inc. on Tuesday said it created dividend reinvestment and direct stock purchase plans for its investors.

The plans make it possible for shareholders to reinvest cash dividends and purchase additional shares of the water and wastewater utility company without brokerage commissions or service charges.

Shareholders enrolled in the plan will be able to buy additional shares automatically, using all or a portion of the company’s cash dividend payouts. They’ll also be able to buy shares directly from the company with cash.

Companies benefit from offering dividend reinvestment plans and direct stock purchase plans because it gives them access to investor cash without issuing new stock.

Investors benefit by spreading purchases out over time, buying more shares when the stock price is lower and fewer shares when the stock rises. That lowers their overall cost, a process known as dollar cost averaging.

The plan will be administered by American Stock Transfer & Trust Co., American Water’s transfer agent.

Founded in 1886, American Water employs more than 7, 000 people and provides drinking water, wastewater and related services to about 16 million people in 35 states and Ontario and Manitoba in Canada.

In middy trading Tuesday, American Water shares rose 44 cents to $21.55. The stock has ranged between $16.55 and $23.77 in the past year.