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Essential Utilities, Inc. (WTRG)

Company Dividend Discount ModelIndustry: Regulated WaterSector: Utilities

Valuation Snapshot

Stable Growth$56.59 - $151.07$86.70
Multi-Stage$40.04 - $43.67$41.82
Blended Fair Value$64.26
Current Price$37.14
Upside73.02%
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 Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$56.59$86.70$151.07
Upside / Downside52.37%133.45%306.77%

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 Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)399.76403.55407.34
Year 2 PV (M)430.67438.87447.15
Year 3 PV (M)459.12472.30485.73
Year 4 PV (M)485.24503.90523.10
Year 5 PV (M)509.15533.74559.28
PV of Terminal Value (M)8,865.029,293.209,737.77
Equity Value (M)11,148.9611,645.5712,160.36
Shares Outstanding (M)278.47278.47278.47
Fair Value$40.04$41.82$43.67
Upside / Downside7.80%12.60%17.58%

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