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Essential Utilities, Inc. (WTRG)

Company Dividend Discount ModelIndustry: Regulated WaterSector: Utilities

Valuation Snapshot

Stable Growth$56.31 - $149.37$86.10
Multi-Stage$39.91 - $43.53$41.69
Blended Fair Value$63.90
Current Price$37.14
Upside72.04%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS12.94%11.94%1.241.141.040.930.840.680.540.510.470.44
YoY Growth--9.34%9.76%11.59%11.21%23.37%25.06%7.16%7.44%7.98%8.15%
Dividend Yield--3.15%3.09%2.37%1.82%1.87%1.66%1.50%1.48%1.46%1.37%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)668.45
(-) Cash Dividends Paid (M)366.25
(=) Cash Retained (M)302.20
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)133.6983.5650.13
Cash Retained (M)302.20302.20302.20
(-) Cash Required (M)-133.69-83.56-50.13
(=) Excess Retained (M)168.51218.64252.06
(/) Shares Outstanding (M)278.47278.47278.47
(=) Excess Retained per Share0.610.790.91
LTM Dividend per Share1.321.321.32
(+) Excess Retained per Share0.610.790.91
(=) Adjusted Dividend1.922.102.22
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$56.31$86.10$149.37
Upside / Downside51.61%131.83%302.18%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)668.45711.90758.17807.45859.94915.83943.31
Payout Ratio54.79%61.83%68.87%75.92%82.96%90.00%92.50%
Projected Dividends (M)366.25440.19522.19612.99713.39824.25872.56

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)399.69403.48407.27
Year 2 PV (M)430.53438.73447.00
Year 3 PV (M)458.89472.07485.49
Year 4 PV (M)484.92503.57522.75
Year 5 PV (M)508.73533.30558.82
PV of Terminal Value (M)8,831.569,258.139,701.02
Equity Value (M)11,114.3311,609.2812,122.35
Shares Outstanding (M)278.47278.47278.47
Fair Value$39.91$41.69$43.53
Upside / Downside7.46%12.25%17.21%

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